What is the classification for a "death drop" spin on the ISU Scale of Values? It's a flying spin ... but ... ?

It is considered a flying sit spin for IJS purposes.

Is it scored higher than a regular flying sit?

It has the same base value as a flying sit, but it's considered a difficult fly, so it can raise the level of your spin.

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But remember, in order to get a level 2 for your flying spin, you need to have one more feature in addition to the death drop entry. You could add a difficult variation of position (like cannonball or pancake) or a change of edge for at least 2 revolutions.

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"You don't have to put an age limit on your dreams." - Dara Torres, 41, after her 2nd medal at the 2008 Olympics

The entry to a flying sit itself, when done properly (position attained in the air), is also considered a feature in IJS, per the 2008-09 Levels of Difficulty:

4) Backward entrance/Difficult variation of flying entrance/Landing on the same foot as take off or changing foot on landing in a Flying Sit Spin

So the flying sit and death drop have no difference in value, at least when done correctly.