I played the v0.3 for a while, I think the art is pretty good, just need to make the gameplay better, learn from other ero dungeon games like 'ero dungeon' and 'kinky dungeon'.
I mean "lost is fun" is done by apply small incremental negative change to player, but not completely revert the progress to check point. I think this can apply regardless of game's type.
The difficulty is OK, just don't pull back too much on fail.