'Dead' has a less pleasing sound than 'gone', which fits better in the phrase rhythmically: 'gone' flows into 'but not forgotten', while 'dead' requires more of an abrupt full caesura to deal with the 'tuh' sound at the end.

I happen to like the even more euphemistic sentence I've read often in psychology blog: "Mr. X has left the building". However, if we want to have a naturalistic formula, I would use something on the line of "He is dead but will be remembered", or, if we want an acronym, DBR: dead but remembered.