Three lives means people are more likely to buy stat tomes, LR1 hearts etc. as the risk of losing it all in a single death (lag, trap or otherwise) is removed.
I thus see this both as a result of the many lag deaths the last time and as a means to increase revenue. I dont think thats an entirely bad decision.
If the rewards are worth it rather than just cosmetics and horses (boring to me) I will bite likely spend some money along the way. But something interesting like the red footsteps from HCL1 will be required for me to go all in.
On the technical side I think they should give a 7 day timeout if you die meaning that the character does not resurrect until 7 days after the death. That way dying still matters a lot more but isnt actually fatal gamewise.