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So the ability to permadie would be a lives system that you could run out of lives? That seems like an old design philosophy to me.
If you watch the youtube series doublefine has on the making of Psychonauts 2 (I’ve actually never played it, but I’m a hobby game developer and found the whole series a fascinating behind the scenes for how established studios do game development), they had a project lead early on to the Psychonauts dev cycle that pushed for things like “blood gates” where you had to kill enemies to progress, and more challenging combat and more traditional sort of “God of War” style gameplay mechanics.
The core devs, UX, animators, level designers, etc. all sort of rebelled against him and went to Tim (the President of DF and the writer of it) and complained until he sorted things out.
So not having these challenging combat pieces was 100% intentional by the dev team that built both Psychonauts 1 and 2.