Thank you so much for these very thoughtful and helpful comments, and for playing the game -- I appreciate it! I'm happy to hear about the parts you liked. On the mechanics, much of my error here was in thinking that players were going to have an easy time with the game. You are absolutely right on the problem #2 you identified -- it threw me a bit, too, but I figured leaving it that way would perhaps add a little challenge (and bugs needed fixing until late in the night). Thinking your game is easier than it is is a classic game jam mistake, but I did it again. As for #1, the way it's coded is that there's a window for making dance moves that opens a bit before the beat and lasts until a bit after the beat, such that striking a key outside of that window just has no effect (there is no freeze of the player). The open/close of the window is based on a clock that starts at the start of the song, so it's also unaffected by when you made your last move, and you can always interrupt a dance move with another one (if you strike a dance key during the window). So my guess on problem #1 is that it's the disruption-of-rhythm sensation.
Your thresholds idea is a good one -- with more time, I considered having a "good" level of striking the key on time (if within a large window) and a "perfect" level of striking a key (within a smaller window), and then some threshold for moving on, but by the end of the two weeks, that got cut.
You made it far -- the third dance is the final one, so you were on the brink of winning! Thanks again for playing and for these comments!