I've just been catching up on the forum discussion over the last couple of days, so I'm sure there's a lot I've missed. But that said, I still want to put in my two cents.
Having Sovereign Death mean Game Over makes perfect sense to me, from a design perspective. I don't know if this is the same train of thought you followed, but it seems simple enough: No matter what you do, there's always only going to be two options. Either Sovereign Death ends the game, or it doesn't. No matter what you try to do, it's going to practically work out to be one of those two options. Your Sovereign dies, and you lose a bunch of permanent resources? Well, now you're possibly crippled by the loss, it creates a death spiral where your force gets weaker and weaker. Since they killed you once already, now it's just a matter of doing it over and over until you stay dead. Boring and drawn out. But if that death wasn't such a serious blow, if you resurrect or take over a heir, then practically speaking you can die over and over and not really suffer - which takes Sovereign Death off the table as a practical loss condition.
So a quick Game Over is the most painless way of handling that while stilll letting death mean, well. Death.
But I take issue with the idea of an Escape Skill, at least if it works described. It would take effect when you've lost a battle, when the character would otherwise die. But isn't that in effect the same as having a skill called 'Resurrection' where, if your character dies, they have a chance to come back? As far as I can see , it's just a semantic difference.
I tend to agree with the school of thought here that, rather than giving the players tools they can use to make Sovereign Death less painful, you should be giving them tools that let them avoid death in the first place. Once you're dead, you're dead, but until then you can at least try to avoid it somehow.
I can imagine something similar - an Escape skill, a Stealth skill, what have you - that would take effect before the start of a battle, rather than kicking in after you lose. A retreat option during the battle itself. The option to Hide your Sovereign is already in, which lets the player decide whether or not they're going to commit to the fight. Letting the player escape after you've lost the battle strikes me as wanting to have your cake and eat it too - you're using your Sovereign to fight a battle or defend the city, but getting out of the consequences if they lose.
As long as they're alive, you should have options for escape. Once that fatal blow has been struck, it should just be over.