From http://dev.bukkit.org/bukkit-plugins/fun-hard-mode/tickets/63-reward-players-for-not-dying/
Suggested by CommodoreAlpha:

One idea that came to mind about dying is to subtly discourage players from dying, instead of the outright "lose xp, items, cash, health, and hunger!" The way I would do this would be to reduce the amount of drops/cash/xp that players earn by a (moderate) percentage, if they recently died. The longer they stay alive, the less penalty in rewards they have. If they stay alive after "x" amount of time, they will have no penalty in such rewards. You could apply this penalty to mob drops, mining ores, etc. But this is just an idea, though it could be within the scope of this particular plugin.

Possible Rewards:
•Increased Health (hopefully without the potion effect particles)
•Speed Increases (spawn with a slower moving speed)
•Exp Debuff when dead and Increasing Exp drops when player killed more monsters without dying. Only applies to "legit" kills. Exp drops could exceed the normal values when player lived for a long time
•Decreased Mining speed after death.

pilvimaa:
Sounds very good - as long as you continue the long tradition of making everything configurable - personally I don't like the speed increases / decreased mining speed.

Well... actually, the more that I think about it - I would probably disable all of those features except for the "reduce the amount of drops/cash/xp that players earn by a (moderate) percentage. You could apply this penalty to mob drops, mining ores, etc." which I fancy very much.

It will be glorious.

Diemex: The Possible Rewards are just ideas I had. I personally like increased exp, drops and max health most as a reward. But maybe someone gets some more ideas for rewards.

CommodoreAlpha:
That sounds like a better idea than "wait to reduce penalty/gain benefit" in addition to being able to prevent/reduce monster grinding (via this plugin or other plugins).

And I never said HungerPlusPlus would make AFKing impossible, but rather, an undesirable option. Although, I never thought of that "auto-melon farm w/ autoclick" idea. People always try to get clever in circumventing plugins and admins... :)

This is unrelated to anything, and is not a suggestion for this plugin, but an admin could prevent that trick by messing with piston mechanics like having melon blocks pushable by pistons so they don't break into slices upon being pushed.

CommodoreAlpha: Reducing how much mobs/blocks drop when killed/broken by a configurable percentage can work, so long as the server is utilising vanilla drops.

But, and as a word of warning, if there's a plugin changing those drops to something else, it won't work as well. One such popular plugin is OtherDrops which I (and many others) use, so I'm wondering that if you decide to implement a "drops penalty/benefit" you could somehow "work" with OtherDrops. I'm suggesting OtherDrops specifically over other plugins because OtherDrops can do what almost all of those other "modify-drops" plugins can do.

A thing about reducing penalties or increasing benefits for staying alive longer. One argument against this suggestion I can see is that people will go AFK until they've reached the optimal level of benefit they can receive. My rebuttal, however, is that forcing yourself to AFK isn't fun and ruins gameplay. My other (stronger) rebuttal, is that servers should be using a plugin like Hunger++ to discourage AFKing.

(With HungerPlusPlus, players can become hungry simply by standing around, making AFKing an undesirable option for anything.)

Speaking of which, I made a comment awhile back that you should add HungerPlusPlus to your "recommended plugin list". I think you may have read over it, or something, but I'm going to suggest it here again because it's a good plugin to have in conjunction with this one.

Also, I'm calling it "HungerPlusPlus" because WikiCreole formatting is annoying.

Diemex: The way I going to implement this code wise is going to be the following. There is going to be a value called something like "lifepoints", killing monsters adds substantially to the value, while time will have no effect. Reward players for taking risks not for being cheap.

I messaged the author of OtherDrops about compatibility.

Regarding Hpp: Under recommended plugins I only have plugins that I have tested myself. When I first looked at hpp I didn't find it too appealing and disregarded it. Now that I think of it it doesn't sound that bad. I might try it with values that will kill you after 1-2 hours of afk'ing.

It doesn't make afk'ing impossible though, because you can easily just stand next to an automatic melon farm and just get a program to hold right click so you eat when your hunger decreases :D.

Not sure if this is really in scope of plugin, so will close for now.