I consider myself a pioneer in the vastly unexplored world of Hexen II modding and made a neat little addon a couple years back.
public Dropbox link (because what better place is there to put it?)
What you need to do:
place the coopfix folder in your Hammer of Thyrion directory and launch hexen II via a terminal using the following line:
h2 -game coopfix
Once you do, when you play co-operative games, players will not drop a backpack when they die and will keep all their items when they respawn.