Yes, you can die. I'm assuming you've all played at least one video game, so it's not such a foreign concept. This RPG is no different from any other game: your character can perish.
Deaths must be approved by a mod (effective immediately). If you are going to kill someone, PM myself or another member of the staff. We'll read through the fight, if we haven't already, and tell you if it's possible, or you're pulling it out of your ass. However, if the difference in power is equivalent to a Category X, then you don't even need to let us know.
Although, if your character dies, not all is lost.
Should you wish to go back to the afterlife, you'll have to go through Purgatory. You can spend this time doing training or getting your freak on. Should your character somehow get killed again while they're in the afterlife, they are utterly destroyed. Zilch. Gone. No longer existing. Same rules of death still apply, but if your character dies while they're dead in the afterlife, then your character will no longer exist, and you would have to go for another character.
If this is abused, it'll get very strict.