Thanks, I appreciate the suggestions. The game itself is going to be fairly story driven and narrative by the nature of being built in RenPy. It will use a lot of RPG style mechanics to guide the players to certain story beats. This ends up creating the issue I'm having where reverting to a previous save is overly punishing and tedious for the narrative side. But simply respawning is to lenient for the RPG side.
I'm currently still leaning towards doing a combination where the player reverts to a save location, and loses some items. Possibly add some kind of negative 'post death' debuff but I'll have to test that to see if it feels right or not.