Concerning keybinds, there is an easy fix however and you might want to instead truly prevent it but, a simple check might work that whenever multiple actions are bound to a single key, floating bright text appears on screen warning the player of this and showing the hotkey for resetting all controls.
I thought Paahl getting OHKO in the midst of it initially was a bug and so I'd suggest to at least append an example to the in-game tutorial if else to just prevent confusion. Having no "laggy" state as you said then goes as contrast towards your idea of Paahul being the early-game as the player has no notion of it, you'd be making things too 'easy' and few aspects too 'hard' with it. I also didn't get to verify if I myself am able to get KO'd and get a second wind/rise up (I'll be testing this right now and editing this post if needed - it does have and it does indeed feel balanced out now), for I think it'd be very balanced on that aspect as you, yourself, do not enable any counter-window(?) during a special either. Your idea of multiple opportunities for a punish is very good and you should add it if you feel it weights better. I'll most likely check out if you update as this current difficulty is trivial for me and I personally like a skillful challenge.