Is there an audience for Indiana Mutt? I suppose it's possible, but I wouldn't want it. Mutt has an adventurous spirit, but he doesn't channel nearly enough of an Indy vibe to replace him directly. He's a motorcycle riding greaser. Educated, sure, but not an archaeologist, not a teacher, his motivations and interests are/would be clearly different. Shoehorning Mutt into the role would feel too forced and awkward, hell even as far-out as GL is, he's admitted this himself. I just don't see any reason to slap a fedora on anyone but Indiana Jones' character. It would smack of desperation to keep the Indy-ness going. Of course, I should stop there, I'm pretty sure there's another thread about this here anyway.
Indy dying onscreen...as to the original question of whether or not it should happen, if it serves a purpose to the story, if it makes for a better film, and there is no doubt that another film won't happen, then I think "Sure, why not". Of course as someone else mentioned in this thread, it would be too easy to botch it up. The safe bet is to not do it. But if it was flawlessly done, I wouldn't have a problem with it. No matter what, it's interesting to think about.