I wish there were more respawing characters in towns besides the guards. I'd like especially shopkeepers that aren't protected from being killed except by the player to respawn. I hate for towns, as small as they are, to be depopulated for any reason. And more types of generic respawning characters that might show up from time to time in towns. Priests, pilgrims, bards, beggars, pickpockets, travelling merchants, adventurers, ect. I really hate when merchants die and I like towns that seem living.

Filler NPCs should respawn (randomly generated, obviously), they should also take over services if unique NPCs perish. The world should never be a desert.

Hmmm... You guys want a dragon to wipe out a town, and then 10 days later there's a new merchant?

I think the better approach is the one taken by mods, where the townspeople flee and hide from danger, and let the guards take care of it. It makes no sense for shopkeepers and miners to try to take on an attacking dragon or vampire with a pickaxe. In other words, the problem is that the non-combatant AI is silly.

Rather than respawning the same character, they could dynamically spawn a replacement (with a dynamically selected name, race, etc) for certain ones. When I first heard that Skyrim would replace shop- and inn-keepers that die, I thought that's what they were going to do, rather than just having a preexisting NPC take over.

Yea, I'd prefer something akin to Jaxonz's real names mod from Skyrim. Just have them create a randomly generated list of names that is given to all radiant NPCs and NPCs that'll later inhabit houses and shops that were cleared out by who knows what.

That would be a good idea.