Don't make instanced, gimmicky, exploration zones ; just make interesting things in the open world areas for starter...

5: The saying is three strikes and you are out. So maybe instead of instant death after getting hit twice you could up that to three times. Two is very low especially when going into something for the first time.
Yeah, and since it's important, it would have a specific UI element so we can easily track if we're losing or not.
But 2 or 3 is a little constricted, so the number should be bigger, for more granularity.
It would allows a lot of things, like skills that restore this number, or make it decrease slower. We could even be crazy and say some jobs are dedicated to this.

It just needs a name now...