I think it would one day be cool for Link to somehow pass over into the suggested Afterlife, without having died, in order to complete a designated quest as the Hero. Thing is, though, it doesn't have to be two partitioned fields of space, such as a Heaven or Hell. It could be on the same plane, but areas which are inhabited by good or bad characters. In other words, the Land of the Dead (as I'll call it) is just like Hyrule in the idea that it is a single territory, except that it's divided into regions—i.e. Southern Swamp, Snowhead Mountains, Great Bay Coast, and Ikana Canyon were separate vicinities in the same land, Termina.
That, or the Land of the Dead could just be like any region Link has to travel to in the course of his journey. And a Dungeon would be waiting for him, filled with evil which has to be purged.
As for what the Afterlife in Zelda might be, I have no idea. But I'd like to see it incorporated into the games somehow. We've had otherworldly factors before, such as the Silent Realms or Twilight Palace, so crossing over to the Afterlife (again, without having to die) would be possible.