Yeah, I still stand beside my theory that this is a virtual reality trap, like Better Than Life in Red Dwarf. It would explain why Arcade's avatar in game looks like a movie star when the actual Arcade was an odd-looking freak and also his godlike powers, not to mention the limits of the in-game map as exhibited in the first issue when the girl with the wings flies into the invisible border.
And then there's the gamer-tag health bar things as well.
Whether anyone actually dies in the game or is just kicked off the server and back to the pod or whatever their interface-restraint is is something I imagine the writer can pick and choose from.