That's... an interesting way to look at it.
Eyyyyyyyyyyyyy
For all you know, the game continues on regardless, but you wouldn't know because you're dead. It's "Game Over" for you. As for why they don't Phoenix Down you, either you're pulling an Aeris, or maybe they were defeated shortly after you. In reality though, of course, it's just a gameplay mechanic.
While that still makes no sense considering just how easy it would be to revive their fallen comrade it doesn't really matter.
Crappy game mechanic is crappy.
EDIT: this thread has gone off on a very major tangent.
Eyyyyyyyyyyyyy
Eyyyyyyyyyyyyy
Tellah just needs a new pair of glasses. That's the real reason he leaves the party to get to Mt Ordeals on his own, he's embaressed about it.