I agree that the enemy encounters in Amnesia are amazing, and honestly I think your game has the potential to be even better.
Part of what made Amnesia amazing was the realism of being pursued (as you mentioned). The way you react to enemies is exactly what any of us non-heroic types would do in real life...hide and shit our pants. However, in those rare moments in Amnesia when you die...you just end up re-spawning. Whenever that would happen, and I would re-play a segment...honestly it lost it's fear. Being killed and re-doing a segment just feels "video gamey."
The fact that you have the branching narratives, however, gives you potential for dying to take on a whole new element. It doesn't have to be a punishment...something that you have to re-do. It can just take you down a whole new narrative branch. I think you've mentioned this idea before, and I absolutely love it. It will make dying even more frightening, I think, because instead of just being able to repeat doing what you've already done...it will take you into a whole new level of terror. There's no backtracking...dying is just part of your journey through your Neverending Nightmares.
