From what I can see, reversing physical death is a high level, but certainly attainable magecraft. Rin revives Shirou after Lancer stabs him, albeit it costs her a jewel with years worth of prana to perform. There are also numerous auto-resurrection mechanics that appear including Touko's perfect replicas and Dead Apostle's time reversal regeneration. Roa from Tsukihime has a particularly interesting one where he allows himself to reincarnate without going through a proper death cycle.
With this in mind, I think what people in the Nasuverse mean when they say resurrection is impossible is probably referring to resurrecting someone after they enter the cycle of reincarnation and therefore have had their soul move on. Basically, if someone has been dead long enough that their soul has moved on (and we have no idea how long this actually takes) it is impossible to resurrect them because it would mean somehow pulling their soul back into the real world after it has dispersed into the cycle of reincarnation and therefore should no longer exist as a singular object.
It would be like trying to find all the particles of sand that went into a sand castle after a wave has knocked the castle down and scattered the particles across the beach. How could you which particles you were looking for. Then how could you fit all the grains in the correct pattern in order to get that exact sand castle again. Only, the difficulty is even higher than that because it means reaching into the root to achieve in the first place.
Heroic Spirits are one of the few exceptions to this rule due to being pulled out of the cycle of reincarnation and preserved in the Throne of Heroes. Even then, it still takes fragments of the Third Magic to give them false vessels in the form of "Servants" and they are merely copies, not the original spirit. In addition to that, they aren't actually human when resurrected as Servants, even if they hold many similarities.
So to summarize, I think that what most magi mean when they say resurrection is impossible isn't reversing physical death, but returning a soul that has moved onto the next step in the cycle of reincarnation to life.
Or I could be misreading things/experiencing translation fail. *shrugs* :3
Anyways, in regards to FRO, I think that this might mean that quick resurrections could be justified later in the game. They would likely require the healer to begin them before the "deceased's" avatar shatters into polygons though. In this way Kayaba could allow players to know resurrection is possible, but their is a time limit. This way he could preserve his "die in the game you die for real" facade, and at the same time encourage the players to pursue quick resurrection spells. Then there's also the incredibly remote possibility of someone in game figuring out a self-resurrection technique. But in that direction lays the creation of Dead Apostles, so let's hope not. We'll have to wait and see what Daniel decides on.