I actually quite like what's presented, even the hijacking and the general difficulty of the game. There's a lot of appreciation I have for an old-timey SMT1/2-esque game, and this definitely nails a lot of the right marks. I think most of the combat difficulty feels appropriate for the games it's clearly drawing inspiration off of, although it felt a tad bad to walk into the Remains of Blazing Hell and getting straight oneshot by a lightning attack off a Tojiko hitting Sumireko (who still had lightning weakness when going in). Granted that's avoidable and easily preventable after you have that knowledge, so it's not that bad of an issue in the grand scheme of things.
Death penalty seems a bit much when paired with that knowledge though, as I can't imagine losing a level or two every time I go into a new area while scoping out what enemies are present and how to avoid dying to them would be very fun, but I can live with it. If it ends up being changed, I'd almost suggest just having a traditional game over (lose progress -> send back to title screen or send to a load save prompt), as that'd keep the general 'punishing' nature of the game and encourage players to be more cautious without forcing them to go and grind the level they just lost back up.
My only request at the end of the day is that you add in a function to allow for strafing when walking around the dungeon (see: almost every Etrian Odyssey past EO1), because that would allow for much faster/less clunky movement without losing the appeal or feel of a traditional dungeon crawler.
Cool game, pretty fun, really look forward to seeing what the full game will contain!