Can you unpack why you went with "No, and" for 1-4? I was surprised it wasn't "No, but" for 3-4 and then "No, and" for 1-2. "No, and" for the whole range of 1-4 feels a bit harsh to me.
Please don't take this as an attack on the design. I love the whole package. It's a genuine question coming from the standpoint of wondering why not use the "No, but" layer at all and going straight to "No, and"?
It definitely influences the tone. If you have a D4 for an ability, it's unusable until you can get an improvement. An interesting thing to work around when "No but" would've been safer/more like other games in the genre. I warmed up to the all-or-nothing approach, haven't decided to change it -- of course we can just go easy on the "and" if we feel it's too punitive.
Completely unrelated, but while I'm commenting: It looks like there's a typo in the physical edition, regarding "resource slot" and "asset slot" being separate terms that are the same thing.