As far as people dying I'd imagine something similar to what we have now in IL2 for the pilots would be the best solution, that is when a person dies they just go limp - no blood or flying body parts or anything over the top just a basic "hey, you died".
The bodies, of course, would disappear after a short time. Or another work-around is to use the "run away" trick where the AI would always see you coming and they'd scatter, I think this would especially be cool for animals, I imagine buzzing a herd of sheep like a helicopter herder
