I was thinking more specifically from MoM where you Wizard doesn't die permanently as long as you have a Wizard Tower in a city. If you're defeated in battle your Wizard retreats to his next Wizard Tower via spell until all his cities with Wizard Towers are destroyed.
This is exactly what happens in AoW2 as well - as long as you have a city with a wizard tower left, your "wizard" simply shifted to a new wizard tower upon being defeated - BTW, wizards were REALLY weak in combat in AoW2 which is not the case here, so if the Sovereign becomes very powerful like Sauron, this can become game-breaking. I mean, how many times can you count on defeating Sauron? 
Maybe the Sovereign loses some of his powers (not just essence) upond being defeated as well?
@Arunodayt: I agree mopping up all those left over small towns can be tedious in many games. Though part of me looks at that as a reward for getting so powerful. Also it makes for good tactics. You wouldn't want to go to war on a new front when you have enemy towns still behind you that you didn't mop up. Now one of those towns could produce a huge army over time and march it right at the rear of your army doing heavy damage if not causing massive disruptions in your empire. Also if this idea is implemented then you'd have a reason to wipe out every town a enemy has. That way he can't resurrect there because you destroyed it already.
Also there could be a "Global Spell" that could be cast that simply stops other Sovereigns from casting the resurrection spell. That way you wouldn't always need to hunt down every last city they have. Just cast that global spell before you kill a enemy Sovereign.
The golbal spell doesn't really appear to be a good alternative to me because:
1. If you are strong in magic, just casting one more spell wouldn't be all that much of a trouble. It will just add one step to the original process.
2. If the above doesn't apply because the spell is very very expensive/difficult to obtain, then there will be big problems for those whose primary focus is not magic.
As for mopping up, I am just saying that it shouldn't be too much - no mopping up is simply not possible IMO. Hmm...this thing is more difficult than I originally thought it would be 