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Were all the PCs on the "good" side, fighting back an "evil" NPC assault, or were there "evil" PCs as well? If so, it seems like it wasn't a lose-lose situation for the entire playerbase, since one side won.
It sounds like the SoI immortals planned out and conducted the entire scenario well, though, and if even the people who died had fun I think we could conclude it's possible to carry out no-win scenarios successfully. I think I'd still likely avoid it myself, if only because I like winning and I think players do too, but with planning and maturity (which the experience I related lacked on both counts) I guess it is doable after all.
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