Tis true that starting back at the castle every time is a ballache, but when I played it - it helped me get used to the world.
Please elaborate - You kill enemies, get exp and as you level up choose which stat to increase. Sounds more standard RPG protocol than archaic.
On a sexier note, the Zelda timeline branches off from Ocarina where "Link failed" (something which technically could be said of every Zelda game) But the fact that they make such a point of that when it's Game Over, Ganon is ressurected. I think it's an avenue with potential of exploration.