I think this is true, but I don't think the fear of death has much of anything to do with it. After all, the same arguments are all true about non-REM sleep. The inability to imagine sleeping isn't stopping anything. (Not even research into sleep.)

The primary problem is that we have a huge mismatch between our subjective experience of introspection and the objective nature of our cognition.

We're used to our perceptions being accurate. Walls are hard. The sun is bright. Flames are hot. Bananas are tasty, unless you don't like bananas, in which case they're not tasty, but the peels are still slippery and the flesh is still not juicy unlike many other fruits.

That this is the case is unsurprising given the demands of existence. Creatures that try to run through walls (trees, rocks, cliffs, etc.) are at a major reproductive disadvantage to those that don't. If you can get this right (who cares how! just get it right!) you're going to leave more offspring than the hapless wall-colliders. Likewise, we need to know how things come into pieces, that properties of objects are maintained when we're not looking at them, etc. etc..

But there is no such demand on having accurate introspective capabilities of the mechanisms that underlie our perceptions. We have the experience of experience and say, "wow, consciousness! I can decide to do something and do it!"

That part's true, but that we can intuit how consciousness works, or even place any sort of halfway sane constraints on it, should be viewed with the same sort of skepticism that we can now apply in retrospect to understanding how vision works. Nobody intuits complex cells in V1--and yet, if your friendly neighborhood psychophysicist crafts an appropriate visual illusion, you can discern their effects (e.g. https://www.frontiersin.org/articles/10.3389/fncom.2014.00112/full).

In consciousness research, we're caught up on the part where we expect to get useful insight from our intuitions. Once we really solidly get past that barrier, we have a much greater possibility of making real progress, regardless of what we think about death.

Maybe there is some additional awkwardness about the death thing. But really--that presupposes that our thoughts about our thoughts are at all useful, and they're probably not.