I did it once on my first (Where I was still new to the thing) in which every Gym Badge you earned made one badge. If it was used up, you weren't allowed to shine the badge, leaving the used ones gray and the unused badges shining. I used a few at first, but really got better as time went on.
http://www.youtube.com/watch?v=yItm3iAonVo Message board arguments in a nutshell.
I've thought about having a second chance rule but with a twist: you can't use a revive or the poke center for the fallen poke, you have to use a rare candy instead. This will limit the amount of second chances to the number of rare candies in the game, barring someone spamming the Pick Up ability...
I used a "second chance" rule for myself on White 2, after getting lucky enough to find a Riolu in Floccesy Farm. Since Lucario is my absolute favorite, I gave him a second chance, but that's the only one.
Nuzlocke is hard! I've had so many deaths-by-crit. I'm still doing my run on White 2, and I'm trying to train some of my guys before fighting Elesa. I've already lost:
Jenna the Sewaddle (crit) Nicolette the Purrloin (crit) Carter the Patrat (crit) Evan the Zubat (stupidly left him in battle against a Roggenrola) David the Audino (I'll be honest, I used him as fodder to heal another poke) Seth the Minccino (same as David) Emily the Dwebble (crit) Gabriel the Servine (crit) Jacob the Yamask (Pursuit on the switch)
still survived are:
Jack the Lucario (on second chance after a crit) Cameron the Swoobat Sophie the Liepard (which I just caught)
I predict I won't make it too much farther...
PSN Name: Exkzol Pkmn White:4899-5281-5555 Playing: Pokemon White, Golden Sun DS, DK Wii, Castlevania (PS3), LBP2