Yeah, you've got a point. Maybe these level-ups happen after the party completes Power Unlocking quests or something. I'll mull it over.

Also, it occurred to me that leveling through failure could introduce power gaps between characters. I'd been so immersed in the details that I didn't think about it from a game-balance perspective. We'll have powers come the traditional way - through winning conflicts. Perhaps they could also be acquired by calling in Favors from the Empress? :P

For the identity of our empress, I think I'll add a dash of Fire Emblem: Three Houses to the mix: [url=https://static.zerochan.net/Edelgard.von.Hr%C3%A6svelgr.full.2762043.jpg]Casca del Raege[/url] (KAS-ka del rage), Empress of the Dragan Empire.

EDIT: PLOT UPDATED