Chaotic/WMG

Chaotic immortality
If a player dies in the real world, their Chaotic/Perim version lives on as a Virtual Ghost. However, the Code Masters might actively go around deleting or "reformatting" these ghosts to keep people from trying to use Chaotic as a way to become immortal.
 * Jossed, look closely and you'll notice the players do age while in Chaotic/Perim.

The M'arrilians lied about possesing the Cothica

 * It's obvious Phelphor lied about the M'arrilians having it. He just said that becuase he wanted Chaor to open the door to the Deep Mines.
 * I'll bet the Cothica is actually inside Kaizeph.

The Codemasters aren't human

 * Alternately, all the Code Masters are Virtual Ghosts.
 * Jossed, the whole Codemaster thing seems to be more like a title than anything else. Codemaster Crellan is just a normal guy named Kit in real life.

Only one life
The limit on players that dying in game destroys your avatar forever isn't a purposeful gameplay limitation, but a side effect of the Brain Uploading/dimensional travel to Perim/Chaotic. Only one of you can exist either in the real world or Perim at any given time.

Ghost but not Immortality.
I could scan myself to Perim in a life threatening situation but my avator would act like a regular human.

Chaotic Crisis would have hit Perim as hard as earth. Especially the more compact tribes.
Man these monsters are dangerous lets try to make peace with them...that didn't work. You say these creatures come from a game and you can use your scanner to get to there world. Well they do look like those creatures from the card game chaotic now that I look, a week ago I would have thought you were nuts. Heres the plan we send players to nuke Perim. Danians lose there will after mount pillar is destroyed, underworld recieves heavy damage but isn't wiped out thanks to the no battlegear at the load bearing pillars thing. Overworld also recieves heavy damage but not as bad as the underworld Mipedians get off lightest because they were spread out. A couple years later earth is repentant about what the did and try to help the 3 tribes of Perim.

The Overworld is lawful good, Mipedians are chaotic good/neuteral, Danians are lawful evil/neuteral, Underworlders are chaotic evil, and Merilians are neuteral evil.
Sure there are episodes actively against thinking like this but otherwise the Underworlders are portrayed as the bad guys and the Overworlders are portrayed as good. We know little about Mipedians or Danians but from what we do know about Danians, they have a very strong government. For Mipedians I'm going with the main four characters reflecting there tribes. Peytons not an idiot but when I think about it he does remind me of chaotic stupid or what chaotic stupid characteres are supposed to be going for.

Tangath Toborn isn't dead, and he will comeback

 * Confirmed, he showed up at the end of the last episode of Secrets of the Lost City and said he'd be back from the Spirit Lands eventually.