Hi BiggerPlay,
it's helpful to think of your animations (movieclips) as just that: animations.
Your character is made up of animations (movement) and stills (images) to represent various states.
So you'd have a parent SPSprite character with a "walking" animation (for example) stored as an SPMovieClip and it sounds like you have a single image for when the character is dead, so that'd be an SPImage.
When the character is in motion, the SPMovieClip would be visible = YES, and the SPImage would be visible=NO.
When it dies, call [movieclip stop] and set movieclip.visible = NO, and set deathimage.visible = YES.
Think also if your character could fly, and swim and jump. You would have separate SPMovieClip animations for each of those, and couldnt' possibly do it by manipulating a single SPMovieClip, so it makes sense to store each state as a separate member variable (SPMovieClips, SPImages etc) and just tweak what is visible at any one time.