It's definitely been my experience that in general once the opposing team gets the upper hand early in the game it's very difficult to come back. I'm not saying it's difficult for some uber god-like player to turn things around (anticipating the leet players out there to respond with "bah, I can die all I want and still win"). I'm talking about the average to lower-skill player that is probably the majority of the population. Remember the majority? Yeah, it's important for them to have fun so that they don't give up the game and you still have people to beat up in the future.
It's just no fun to fight a losing battle right out of the gate. It would be great if the game could determine when a team is severly outclassed and help them out a little. Boosting the losing team makes it more fun for that team, and makes it more fun for the winning team by offering more of a challenge. Then again maybe some of the leet players get more joy out of being 5-7 levels higher and just annihilating the other team. Personally I enjoy games that are close fights. Makes me feel like I accomplished something if I had to actually try hard to win.
I like the idea of the scaling death penalties. I think that could definitely aleviate the situation. Time in limbo, xp and gold rewards to the enemy... It makes sense to start low and build up. Slapping newbies with 30 seconds of staring at a faded screen doesn't seem like the best idea to allow them to enjoy the game. As for the comment of being able to buy items to decrease the death time, and upgrades... give me a break. You really think a losing team is focusing on spending all their very hard earned gold on that? No, they're spending it on whatever they can to try and stop the annihilation like armor, potions, etc.
I'd really love to see some sort of "Underdog" code put into effect. If a team is getting severely trounced, lagging behind by multiple levels, have the game ramp up their gold a little. Have their regens increase a little. More xp maybe. There are lots of variables that could be increased by small amounts (or even big) that could keep the game fun for both the doomed team and the Force of Nature that is the dominating team.