Perhaps constant use of the Raise Dead spell could weaken a NPC every time he/she gets resurected. This could be done by knocking off a point from constitution if they have been continually rasied over a period of time.
It would prevent its use on a constant scale because it would just make everyone in your party weaker and weaker.
I like to go through the game several times with the NPC with differnet characters just so I can explore all of the different dialogues they have. But if they are really intresting then I always keep them with me with every game.
I think it would be cool to have him start off as a paladin and from there you could perhaps influence what he becomes later in the game. So instead of having him turn into a Death Knight in the end you could try to stop him from going evil and to stay as a paladin.
But of course you could still let him turn into a Death Knight in the end if you were a really evil character.