Thanks for playing! Yeah, I had a _lot_ more planned to do with the sanity, that didn't make the cut. A couple people's runs did get ended by it (though, mostly due to not paying attention, not due to anything else -_-). I'd also originally planned on all of the monsters coming back when you went back to Solitude, so that you'd have to manage sanity on a run between each rest point, but then it became clear that the balancing had to be really tight to work at all, and that'd be nearly impossible if I couldn't control how much XP people got, so that feature got cut too (luckily, before spending any time coding it ^_^).
Out of curiosity, when you leveled up your characters and then lost them, did you notice that the replacements had their tier increased (had more HP / shield), or did you think they were just getting replaced randomly?