I think it's possible if you want to at least have a chance that one of your characters will survive the bloodbath. So, that's one way we could continue to have the players able to actually play after a couple of deaths.

There is another idea, but it's pretty spoilerish if you haven't played or read the LP of the second game. Spoilers for super dangan ronpa 2 below.

[hider=spoiler] Have them when they die, have them go into a coma, showing this is actually a virtual space, and have them wake up from their comas early to rally and fight the mastermind or something. But that might could cheapen the deaths, too. [/hider]