We have an opportunity to bring some flavor to DDO!
We can all agree that attack and damage bonus is a more solid choice. However, this makes the item good for melee DPS builds only...
On death effect is something that would be quite unique in DDO and that could be enjoyed by everyone.
Also, on high reapers people die frequently, this would make it more fun definitely!
The original DnD spell that I believe is inspiring this ability reads:
"If you are killed, your body is instantaneously destroyed in an explosion that deals 1d8 points of damage per caster level to everyone in a 30-foot-radius burst"
This is a very large radius which is good, the damage needs to be scale up obviously. As for caster level, it could be the minimum level of the item?