From a narrative perspective, killing characters to just add drama is pretty much the worse reason ever to have them killed. Artificial drama like that is poison for any good story, doubly so when you do it at the end so you don't really have to deal with the emotional consequences. If Toph was to die, you have to think about what that'd really mean.What would the death mean in terms of her personal story, the character development and history she'd accumulated on her journey? What would it mean in terms of other characters' stories, particularly Sokka, who'd be the one who failed to save her?
I'll admit it opens up a lot of opportunities, but there's no way they'd be able to explore them all to justice in the, what, 20 minutes the series had left?