Dead pixels come from the yield rates for LCD screens.
When Intel makes a tray of P4's, it's a big square matrix of chips just like an LCD screen. Then they cut them apart and test them. If there's a bad one, they throw it away.
LCD manufacturers like Hitachi don't get the benefit of cutting the pieces apart before they test. If there's a bad one (or more than one), they can either throw the whole panel away or they can sell it anyway.
If they end up throwing away half their panels, the cost per good panel just doubled. So they have to balance how many defects are acceptable versus how many they can make and how many they can sell.
The last time I looked, the manufacturers really do get a yield around 40-50% (meaning they throw away 5-6 out of every 10 panels). That was a couple years ago, though, and I bet things have improved at least a little as they roll out better and better processes.
So it's really consumer demand for cheap LCDs that is behind dead pixels. If we were still willing to pay $1000 for a 12.1" panel (instead of the current $295), we could easily get zero defects.