Here's how it could work:
Dredd defiantly faces an enemy, however due to age and fatigue, he is put into a situation where is unable to defeat this enemy without dying himself. Now this enemy should be somebody or something that poses a threat to the entire city, somethign similar to Total War. Dredd would give his life, passing the mantle onto Rico. Rico would accept the mantle, and in honour of the old man, change his name to Dredd. After all, he claimed the name Rico in order "to give it a second chance" (if memory serves me correctly), so perhaps he has a change of heart along the course of events leading to Dredd's death, and decides that Mega-City One NEEDS a Dredd, and that his service to the city is far more important than his personal quest to try and save the Rico name. In doing this, he is kicking aside a large chunk of his humanity, becoming the same machine that Dredd was. Then you simply do a quick relaunch, a brand new Dredd with a brand new history and mythos awaiting to be built.
By doing this we still have "Dredd" as the toughest law-man of Mega-City One to headline 2000AD (I'm talking about having Rico basically, for all intents and purposes, BE Dredd), whilst also getting around the pesky age issue. It wouldn't damage the Rico character either, in fact it would be a great piece of character development, to show how Rico failed to be independent in the shadow of the old man, and instead bended to the system and all it's flaws the same way the young Dredd did, before he became cynical and started questioning the law, banging on about mutant rights and what have you.
That I think could potentially work.
Failing that, nah, just clone Dredd a new body without a brain, transplant his brain into the new body, and hey presto, Dredd lives on.
Kill Dredd, then reveal there was a new Dredd clone just entering the streets, brand new Dredd, basicaly same character, now has to live up to the Dredd name as Dredd had to live up to fargo, starts small with street level crime, works his way up as the comic progresses, new relationships, new character to develop.
Tonnes of possibilities spring to mind, some of which save Dredd, others see him die but save the franchise and in a sense, keep the Dredd story going.