I am torn on this. Party of 4 is a very small party. Loosing a character can be devastating. I did find that some fights can end up with 3 of my characters perpetually resing each other while the 4th one actually does something.
Still, I think BG3 home brew has too much unavoidable “bullshit” mechanics to be able to dish out stricter punishment for failure. That would only further encourage cheesemongering.