Time makes big difference.
If you get killed by player, it's somewhat "fair" to take your loot instantly. And it's possible.
If you died by NPC and someone just found your loot, they can't take it instantly and it creates a danger to get caught by owner / other players.
And if you come back to the place you die and want to use all your stuff instantly -- you can't as well.
E.g. trying loot every dead body in dungeon will make you fight several waves of enemies and with pickin up all - it'll be gone.
Fear and danger of looting unknown pile in core - will be gone with all scavenging fun and atmosphere.
This is indeed huge game balance change, and other servers have other differences, which makes this one this so special. Please don't break it.