Alright, how about keeping the experience, but give it the ability to "upgrade" the Ilari as well, so that you can get small boosts (cumulative over time) to new characters in case of death, but the current character gets a larger boost?
Again, I'm talking only a very small boost per XP-based upgrade - no more than 2% of current stat per level, and you'd only get the points from bosses and missions.
If you have to kill 10 or so bosses per upgrade (depending on the settings of your difficulty options and the difficulty tier of the continent), it simply gives you the option to use that when you find the game is getting too difficult. And, yes, you could disable it at worldgen if you don't want to be tempted to find a manner in which you could level yourself to be as dangerous to the Overlord as the Overlord would be to you at initial generation.
I really don't understand why people are actually opposed to the idea of "enable the player to empower themselves." Is it a lack of self-control? A desire to NOT want to find a point of encouragement to keep playing the game? Eventually, you WILL grow bored of being so overwhelmingly powerful where you are, and actually seek out new challenge, whether it's in generating a new character or simply moving on to the next continent.
It isn't even about WANTING to have an easy ride (Or, at least, not about being given an easy-mode stick), it's about WANTING to feel that exploration and challenges can continue to make the character stronger. Simply turning down the difficulty doesn't make the character stronger, it makes the world weaker. Right now, as you continue to kill things, it unlocks new, more powerful, more dangerous enemies. But, it doesn't make the characters any stronger. The sole purpose of even bothering with taking out the lieutenants and overlord, is to progress. Yet, that progression is lost with every new continent you move on to. And that progression doesn't make you stronger, it makes the world stronger.
As it stands right now, if you kill a lieutenant and push the continental tier up, you are effectively weakening yourself. Even once you get the correct spells for that tier, you will only do, at best, about the same amount of damage in relation, yet you will take more damage, you unlock more danger, you make the world more challenging. So, using your very viewpoint, why should the player EVER bother trying to progress in the game, if it only serves to punish them with no form of reward?
You do so, for challenge. And challenge should always have its own reward. Otherwise it's challenge for the sake of challenge, which is just trying to create an unneeded meat gate. Increasing the difficulty, increasing the tiers, should come with a form of reward that you can't get at lower difficulty. You should be given a way to not just overcome the challenge, but to be able to override the challenge with persistence. Not everyone can progress the same way, and it would also mean that even between characters, the entire game feels different.
Then again, maybe I'm simply not the kind of gamer that should ever be able to find enjoyment in the game. I only have 42 hours into it so far, and I'm still just on the first continent, because I'm exploring. I wander around, I look for what there is to be found, I just set out for an hour or two at a time without checking back in at base. By saying that having a way of persistent character advancement (experience points) which can be used to make my character stronger, you are effectively saying that my method of playing the game is fundamentally -wrong-. That I shouldn't want to explore and see what there is to be seen. I have 8000 upgrade stones that will never be used, but I do wish I could upgrade my HP and damage more, because letting the world get stronger just makes things take longer for me to play the game in a way I want to play it. But simply completely removing the upgrade stones and giving me NO way to promote, enhance and power up my character after generation beyond excessively tiresome attempts to find better enchantments, doesn't make it any more desirable to play.
If I feel I am making progress, I keep working at it. Once the feeling of progression is gone, I look for a way to progress again. If there's no more room for progression beyond just making the game harder, I'm done playing. Especially with a game that has no end. If progression becomes difficult because it gets to be too grindy, even after I've done everything to minimize the grind, at least the option for progression is still there, but it means I can go find something else to do without being strictly punished for it. I can still "level" in the background, while playing the rest of the game. I can still look for things, and let the upgrades come to me as they do, once it's no longer something worth putting the conscious effort into. But if there simply IS no progression, nothing more than "You've done well, we shall now punish you for it" then why would I continue to play?