I understand that Paladins are supposed to be rare, but that is in-universe.
In AD&D 2E there are 6 methods to generate a character.
Method 1: 3d6 in order.
Method 2: 3d6 twice and keep the highest.
Method 3: 3d6 assign where you want.
Method 4: 3d6 twelve times and take the highest then assign where you want.
Method 5: 4d6 keep the highest 3 and assign where you want.
Method 6: Every stat starts with 8. Roll 7d6 and assign the dice as you see fit to your scores.
You also have the option to not take those stats that you roll and roll a new character. Yes, it's hard to get a paladin in many of those methods, but you can reroll until you get what you want.
At this point the simulationism gets in the way of the actual game.
D&D is not a simulation and never was meant to be one. It also predates the retarded GNS theory by 20+ years.
What is the smart move when faced with a fight you can't win? Run the fuck away. When your players are flimsy because of poor rolls and they have to dip from most fights are you even playing the game anymore? And sure you can throw dudes into the meat grinder and hope you come out on top, but at that point your heroic fantasy is a roguelike, and there's a stark difference between being a dude from a heroic fantasy and being just a class and a level.
This is why your characters will die. You think that every encounter is a fight. By default you have 3 options when handling an encounter. They are fight, flee, and parlay. Set your party stance to friendly with a character having a great charisma score for the reaction adjustment and you'll never get a hostile reaction ever. You proceed to parlay with the beings in the encounter.
These are the percentages for a 2d10 roll on the the reaction table's Friendly PC Stance column:
Friendly: 21% (2 or less to 7)
Indifferent: 42% (8 to 11)
Cautious: 30% (12 to 15)
Threatening: 12% (16 to 18)
Hostile: 3% (19 to 20)
If you have a Charisma of 15, you'll get a reaction adjustment of +3 which negates the hostile results. 16 gives a +5 which further removes Threatening from being rolled. 17 Charisma gives a +6 and 18 is +7. So the worst you will ever get on the reaction table is cautious.
With that part out of the way, you get experience for overcoming the encounter. Page 68 of the DMG Premium Edition it literally says, "The characters must be victorious over the creature, which is not necessarily synonymous with killing it. Victory can take many forms. Slaying the enemy is obviously victory; accepting surrender is victory; routing the enemy is victory; pressuring the enemy to leave a particular neck of the woods because things are getting too hot is a kind of victory."
"A creature needn’t die for the characters to score a victory. If the player characters ingeniously persuade the dragon to leave the village alone, this is as much—if not more—a victory as chopping the beast into dragonburgers!"
Experience is divided into HD value of the creature, story goals, and optionally individual rewards.
JarlFrank and his group faced off against 10 HD evil treants at level 1. They sent in 2 druids to parlay and I rolled a friendly result. They had a nice conversation then both sides parted ways. In another instance, the party came across magical jaguars that could speak. The party had set themselves to friendly and I rolled a friendly result on the reaction table. The jaguars conversed with the party to tell them that one of the former mains, now a gold dragon, was always on the shore in the evening sad about being transformed.
The very first encounter the entire group came across was wild dogs. They set their stance to friendly and interacted with the pack to start the process of taming them. Combat should always be a last resort when outnumbered and outclassed.
Play stupid and think that you have to fight everything and your character deserves to die. Play smart and use your brains to overcome the challenges then your character deserves to live.
True D&D™ is not balanced. It never was designed that way. It assumes that you're an intelligent person that can put together the clues given to you by the DM to overcome the challenges. In the encounter with the 10 HD evil treants I described all these various creatures that were much tougher than the party as being skeletons or partially consumed remains. You can read the encounter in my log about the campaign. The party put the clues together that these treants would wipe the walls with them. That's why they chose to talk to them. Since the party had surprise they could have also retreated from the encounter and still got the experience.