I was thinking that after level 50 you'd start getting PP only every 4-5th mountain kill and then after level 100 you'd stop getting them entirely (except maybe for boss kills). Because atm it's easy without prestiging to just start melting mountains after certain point and rank up so much PP that you quickly run out of PP upgrades to buy. But this kinda goes against the flavor of prestige, as well as what you've been saying of wanting to be rewarded for more progress. The outlook might of course be completely different when more upgrades and mountain levels/bosses are added and health is probably buffed.
Your difficulty mode sounds kinda cool, but even with just current 108 PP max, you'd need like 200-300 mountain kills to get that much PP, which seems impossible to do if the mountains already killed don't yield PP, because of how exponentially ridiculous health scales.
But I was thinking of having some kind of "Ascensions" system, where maybe after you unlocked all PP upgrades, you can infinitely keep buying certain upgrades, or maybe reset the entire PP tree but get a powerful permanent buff, and you can do this infinitely. This way you could keep playing and get really far, or even maybe each ascension the game also gets harder (though what would this entail, just more HP and more dens/calamity spawning?).
As far as losing goes, initially the idea was that calamities/dens could also destroy buildings, or at least slow them down, as well as actually kill dwarves/runners, but that wasn't very fun and didn't add much but frustration. However I will be adding a few ways to lose / be forced to prestige, such as a DPS/PP-check at say mountain level 75, probably in the form of a boss. Plus probably another key-like gate at lvl 100 or so, where you need unique artifacts obtained from forging/alchemy/spelunkers to progress.
As for challenges, there will be steam achievements, plus maybe if the game's scope doesn't get too big, a late game prestige building that gives players hard quests/challenges that they need to complete either in a single run or through multiple runs.
Thank you for the feedback and encouraging words! :)