Matt's character died last session. To be fair, he was riding a flying disintegrator dragon when it took a critical hit headshot with a nuclear grenade and exploded in a ball of radioactive fire. He then failed his reflex save, failed his damage save by a bunch, and went straight to Dying. Falling damage did the rest.
Was it technically a rules-legal death? Probably not. A second reading suggests that even a dying character who takes more damage (eg, falling) would get another damage save, likely at no penalty, and odds of that one putting him straight to dead were low. Getting killed is hard work in Mutants and Masterminds; it is built for the superhero genre, after all. Generally you have to beat the living tar out of someone at length first, and then dying takes a matter of hours. Now, I get that Alex is using the Massive Damage rules to shift the system in a slightly grittier direction, in keeping with the sci-fi horror hulk-crawl vibe he's going for, and I'm all for that. Matt's death was completely in keeping with that flavor, and I had no problem with it. Pretty good way to go, if you ask me.
The place where I do think Alex broke genre as a concession to gameplay was in the handling of Matt's replacement character. Matt died, we made it back up to the surface, and lo and behold there's a badass up there with some kind of man-portable shrapnel cannon and strange masochism-fueled regenerative powers waiting to join our squad. The issue here is that the horror-flavor space dungeon crawl is essentially an attritive exercise. You go in with a squad and they're slowly killed off one by one by strange, terrifying enemies until only Ripley is left and escapes with the cat. When you allow replacement PCs, the party stays at full strength and that "oh god we're all going to die in here" overtone disappears.
The cost to the player of the death of a their PC is basically zero in this system. You don't lose out on earned XP, because the rate of PP gain is ridiculously low (we had one PC gain 1/15th of a level last session. The rest of us made no progress). You don't lose out on treasure, because there is no treasure. You don't fail to accomplish the mission, because the Party will remain at full strength (and even if you did fail to fulfill the objectives, I know I personally don't care all that much about consequences within the setting, since we don't have any real attachments to it except for Jared and Matt's old character). The only thing we do lose is real-life character design time, and honestly I'm not sure if there's really anything stopping us from bringing in more-or-less identical replacements, which would nullify that cost.
As a result, I know that I'm playing to get killed, ideally in an entertaining fashion. Exploits from last session include: being used as a projectile by the group's telekine (and taking no damage from it), charging the disintegrator dragons, attempting to grapple living darkness from beyond the stars, and voluntarily being used as a target for friendly grenades because I was easier to hit than the real target, but in melee with it (again, taking no damage). I the player am indifferent about that character's survival, and fortunately, so is the character in-game. So... I guess I'm going to keep doing really, terribly stupid things until something comes along and gives him a spectacular death.
This line of thinking eventually brought ACKS to mind for contrast, though. In ACKS, there is a clear progression of treasure, XP, and worldly power which the death of a character can interrupt. Sure, you can get resurrected, but Restore Life and Limb has its own perils, and sometimes it just fails, or puts you in a position where you are going to die again very shortly (as with the side effect that calls Invisible Stalkers down on your head). When people die in the dungeon, it can definitely obstruct the party's progress, but it does so without cutting players out of the game provided that they have henchmen. You also end up spending reserve XP to bring in new characters, which provides a resource management aspect.
But what about that completely new 1st-level party with no gold, no XP (reserve or otherwise) to their name, no connections to the setting, and no real objectives other than "go in, stab rats, get copper pieces"? Why should they care if individuals die? Chargen takes like three minutes, so that's no disincentive. There is, however, one last resource that death in ACKS costs you, and that is ability score sets. When you roll that 18, you cherish it and protect it and use it wisely and well, and if it dies, it's gone and you can't just bring in its clone brother. This may be the most telling argument in favor of random ability scores compared to point-buy that I have yet encountered; if you like what you're playing, you should keep it alive because you cannot just revert to it when you die.
In conclusion, Mutants and Masterminds is not build with high PC lethality in mind, and does not provide any good rules (or even suggestions in the GMing section of the book) for handling PC replacement in a way which discourages degenerate play. Degenerate play results.