I don't see any need to re-issue lost coins, rather just allow a deflation in the money supply. Economists hate deflation, but investors love it.
One unintended consequence might be that investors are more likely to delegate their holding to a third-party (e.g. a bank) to ensure the coins are moved in a timely fashion.
What about coins that are simply "never created" due to the block reward penalty? Specifically, what does such a penalty achieve in the first place? I think the current penalty is set to never exceed 9% of the intended subsidy .. leading to a minimum of ~1678000 coins rather than the intended 18440000 in the design. Should these be taken into account somehow?
Edit: I'd like to add that I could use Darkcoin as an example here .. evan based his block reward off of difficulty. If difficulty were to drop into a range that would yield >5 DRK / block the exact coin supply (when planning for the future) would be unknowable. What kind of effects does an unspecified emission have when taking into account some kind of fixed block reward toward the end of emission?
The total number of coins doesn't even matter. You can have a coin with 17 million or 17 billion. It's all the same thing except the number of zeros.
The block penalty is miners (mostly pools) being stupid and burning their own coins, something you can't prevent with any coin. For example, minergate is still using the old code with larger penalties. You can't stop stupid.