Neat twist on chess!
Not sure if pieces not showing up where they are and some ghost sprites appearing is part of the “you are slowly going crazy” or just plain bugs, but if the former I don’t think these adds much to the game.
Having a sequence after your turn where all of your attacking pieces wiggle for each damage they deal and get would make the core mechanic obvious.
Health bars (or some visible wear for like quarters of the health for each piece) in some form or another would be great, clicking on each piece to inspect it is less than ideal.
I think killing the King might still be a good end-goal to the game even with your rules.
The overall health could be reduced or some pieces could deal higher damage, maybe even based on distance for the long range attackers?
Either way, this game has potential and could be a solid and fun chess variant after some polish!