What would happen if you died in normal SAO before the Kayaba announcement? This might be a bit out of a place-question, but does anyone happen to know what used to happen after dying in Sword Art Online before the Kayaba announcement that if you die, you will die in the real world? The players most likely respawned, but what about all of their progress? Would they have to beat all the levels and all the bosses again and start from the starting town, or could there have been a checkpoint system so you would not lose ALL the progress?
“I understand your feelings...I never thought there would actually
  be such a dream item. «Nicholas’s bag contains a legendary item that
  can bring the dead back to life.» ...but...like most people, I think that
  was just a lie. Or rather than call it a lie, I mean it might be a left over
  speech for NPCs for when SAO was just an ordinary VRMMO...that is,
  originally, this item would have revived people without the conditions
  of the «Death Penalty». But, the SAO now has no such thing. There is
  only one penalty, and that is the player’s life. I don’t want to recall that
  event, but this was said first day on the clearing by that Kayaba fellow.”
  from the chapter Red-nosed Reindeer of the second volume


It seems that there was some kind of penalty for dying. This might have been a similar one as in ALO, considering that it was based on a copy of the SAO server, i.e. the loss of some skill levels.
Another consequence of dying was that the player respawned at the starting town.


  I must have died at least 100 times during the two months of beta
  testing. I had re-spawned with a slightly embarrassed smile on my face
  in the palace north of the main plaza, the «Black Iron Palace», and ran
  off into the hunting grounds again.
  from chapter 3 of the first volume