Hey, i'm right there with you guys, so don't feel too bad. Hypochondria (in my opinion, of course) is the result of anxiety--can be any anxiety too, not just anxiety about a real disease. For example...Say you are worried about a hard exam: bam, you have a random (normal) symptom of nothing, but you blow it out of proportion because of your heightened level of stress. It's all just re-direction of anxiety that mostly comes from other sources. It really doesn't help just to say to yourself "golly, i'm a hypochondriac, I should stop worrying," because you don't. Until you deal with the source of the anxiety, it won't go away. Every strange-feeling tissue is a tumor, every funny smell is brain cancer, the funny way your face looks is a pituitary problem...
I am a hypochondriac myself, but not a very bad one. That is, usually i'm not a very bad one! When my dad died, I went off the deep end with it, and if you wanna hear a funny hypochondria story, well, here ya go:
i was so stressed over my dad's death that all the fine muscles around my skull were tight and pulling. However, I imagined that there was something growing inside my nasal cavity, because it felt like my nose was breaking (it wasn't, it was just the facial muscles pulling over the bridge of my nose, causing pressure that felt rather curious). Then, because I also had post-nasal drip (always have), I imagined this thing in my nasal cavity had broken into my brain (i kid you not) and now all this spinal fluid was leaking into my throat. I really thought this. I believed it, and told it to people with tears in my eyes, begging to be taken to the e.R.! It sounds totally ridiculous now, but I was very serious about it then. It just feels so real when your perception is altered because of high anxiety.
It's very possible that bad cases of hypochondria do come from a fear of death--that would cause you to be extra concerned about any old symptom and make you blow it out of proportion. Imo, the best way to deal with the physical problems is to deal with the fear itself. And, in the interim, read a good book that has nothing about ill people in it!