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If I was making a cinematic flashy AAA action game I would make the primary advancement/leveling mechanic "every time you run out of HP, a cool shonen-style scene plays and you do a quick-time event to unlock a new power level" and just get rid of failstates entirely.

"But what about the gamers who want to feel better than other people?" the trick is to have two difficult settings: "Story" and "Technique". The latter has a flashy combo meter + scoring system & gives you a grade at the end