According to Peter David, he actually ended up in hell and was brought back by demonic forces that wanted to use him against Spider-Man in Friendly Neighborhood Spider-Man. Then somebody else during Brand New Day had him reappear as his old self, claiming that it was all just smoke and mirrors --- "Master of illusion, duh!" Since utilizing Mysterio in Ben Reilly: The Scarlet Spider, PAD has implied if not outright stated that Mysterio actually did die and wind up in hell, only to have somehow reclaimed his life and freed himself from his servitude to the forces of hell, which was why he was retired before Misty pulled him back in.