Whilst that particular scene I think you're talking about is supposed to reset you to level 1, that should only apply for the first part of the area. Can you confirm you have completed the stealth section, escaped from your bondage, grabbed the key from them, and used it to reclaim your gear from the storeroom to the right?
Also your gallery will unlock once you complete all the story content.
Yup! Have done the stealth section and reclaimed my gear (amour shows on the sprite, but still naked in battle, though? and inventory is completely empty except for the azure from the chest in the same room).
I've even gone to a previous save and re-done the area thinking the moondust was supposed to help you get out that battle.
If it helps to know, I'm on the Linux build. (bug on this build; the "stroke self" text with the heart doesn't display properly; the colour formatting text shows up instead.)
Gallery... makes sense. xD
