Out of courtesy, I stay in the battle after death. After all, I would like to see how a game goes rather than just quitting. It's also a good place to look at other peoples' strategies without having to worry about one's own ship.
If they do alt out, it shouldn't cause any problems, at least with the simpler Free for All scripts. As long as the person didn't have to go somewhere or dropped, however, I think they should stay and see how it ends. More fun for everyone that way, especially when only one of your teammates is out there flying, you cheer them on, and it turns out your team wins.