For suspense and to get us to tune in next week. I don’t think there was any other motive (when written and aired) than as a set piece to up the stakes as such. They are on an adventure to find the cockpit for the radio. Wow, pilot is alive, great, brilliant, oh crap weird smoke thing just grabbed him and ripped him to pieces. As AES said, for both the viewers and characters, how does that happen? It also provides an element of suspense rather than surprise over the smoke monster (when you know what could happen, all encounters are more suspensful). It changes the scene from an adventure to a thriller, and for the viewers, lets us know early on that this isn’t an ordinary ‘people crash landed on a deserted island’ story, something else is going on here and it’s weird, supernatural, mean and scary.
I think that later on as the story developed and other characters were introduced, the writers came back to Seth to add depth to the story, for eg. how do we connect Lapidus to the losties? what if he was meant to be there, how? lets make him the original pilot, it also helps to question Widmore’s fake.
They were going to kill someone in that episode before even the major characters and storylines were hashed out, Jack was an option which means that his character arc and massive importance to the ending wasn’t anywhere near thought of or developed. This is why I don’t think there was any pre awareness or meaning behind his death other than to get us to keep watching and to scare the losties, to give them some knowledge of what they were up against.
I know this theory has come from a bit of a different perspective as some of the others. I don’t feel I can see Lost as a piece that was complete when it was started, if that makes sense. I don’t think they had many of the details sorted out at all until they got there, so I’m looking at this from the what did it mean as they wrote it perspective, how did it progress the story then and there.