I did this with 3 common events, couldn't tell ya why I didn't just do one. Also, make sure to turn off instant game over in BABS.
For the example we need 3 switches. The ones I use are:
2 : Death?
3 : Game Start
5 : Recovery
First, just make a common event that runs at all times during the start of the game. (none of these variables/switches are global)
The script condition in the picture is : $game_party.actors[0].hp == 0 && $game_switches[5] == false
This checks if the player is dead, and they are not recovering already. Then turns on the Death? switch.
This is what you want the screen to do as the player dies. I just made it fade out, but you could make it flash, etc. This one
only runs when the death? switch (from above) is on. you also need to turn on the Recovery switch and turn off the death? switch at the end.
Last, you handle what happens to the player as soon as they die. Since I had the screen fade out, I had to have some wait frames because it didn't look good for the player to dissapear. Then I did a room transfer, to a temporary death map (so that the dead player is no longer seen on the same map), and then I transferred them back to the starting map.
The result: