The binary win/lose of combat is something I dislike quite a lot. I don't think it's fitting in grand strategy games (and I think at it's core, that's what TLF federation wants to be, a grand strategy game). Losing a battle in a grand strategy game should be a set back, not a game over screen. You can lose a skirmish/battle in AI-War, Total War, Crusader Kings 2, Mount and Blade, pretty much any 4X game, etc... and it doesn't mean you can't turn things around. Hell, sometimes a loss here means you set yourself up for a win somewhere more important "lose the battle, win the war" so to speak.
Now, that doesn't mean that perma-death from loss can't work in a game. FTL: Faster Than Light is a very good example of a game where that is core to the design. Why does it work there and not here? Well, simple, because all "wins" in a game like FTL are not equal. How you win each battle is extremely important, and a Pyrrhic victory is something you will feel through the course of the game. You don't lose in a single battle, you lose over many battles, the last one just happened to be a killing blow.
In FTL? What does it matter how you win. You either win or you don't. Taking many turns moves the simulation clock a bit more forward, but that effect is not very significant, and the 50 turn "enrage timer" (which I think was a bad idea, but that's another story) normalizes how long battles can take to an extent anyway. You dominate the other side? Barely scrape by? No difference, a win is a win, just don't lose or you'll get the game over screen.
I like games where losing is fun, but the kind of losing I want to be doing in FTL is having the situation spiral out of control at the macro level. A loss where a anti-federation ends up dominating the system (if that is even a loss condition, I'm not sure) reflects a loss from many strategic decisions over the course of the game setting things down the wrong path. A loss from getting your ship blown up isn't nearly as "satisfying" or story-building. It's basically, I was in the wrong place at the wrong time and what was going on in the solar system doesn't even matter.
The whole combat thing in this game just feels so orthogonal to the game. I don't really care what goes on in a specific battle that much, I just want it to be over with so I can get back to my plotting and politicking. When it's easy, it's a boring waste of time. When it's difficult, it's a frustrating waste of time.