I think this should be renamed Sarcophagus, and the ability should be Pharaoh's Curse, costing 2 . When cursed by Sarcophagus, the creature turns into a Scarab when it dies.
I like this idea.
Well, Scarabs were used as Grave Goods, thus where the name came from. Name doesn't matter much, though.
Oh, and another idea is that when a creature dies, it is turned into a scarab. So, when your opponents creature dies, it turns into a scarab. This gives the card a down side, as well, and makes the playing field even.
I was also kind of straying away making the ability be triggered by a different element, so it could be used in mono-time decks. However, raising the cost seems good. I'd even go as far as to raise the cost by 2 and ability by 1.