This might be working as intended now actually. After setting
force-gamemode=false
then players are staying in specator mode when they die and rejoin.
Older versions of the game used to actually add them to a banlist and I guess that was what I was expecting to happen but that is no longer the case.
restarting the client does not solve this issue for me. I cant swim on my multiplayer server but other players are able to swim fine, so it doesn't seem to be affecting everyone.
FYI this should be closed. Hardcore on multiplayer server works as expected.