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What are some games that "spin" failure states?
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They're oldies, but both of the Soul Reaver games and the Raziel parts of LoK: Defiance have a two tiered death system. (Minor spoilers going forward, but I'm talking spoilers for the opening cutscene from Soul Reaver, so I'd argue not real spoilers.) See, after having his physical vampire form thrown into the well of souls and falling through an endless abyss for several hundred years, Raziel exists first as a structurally sound spirit in a world where most things don't maintain any resemblance to their corporeal forms after death. After being salvaged from the well of souls and set on a quest, he gains the power to create a corporeal form that resembles wretched wraith he has become in spirit. But that new corpse isn't him, and destroying it doesn't kill him. It just releases him back to the spirit realm, where he can regain his strength and manifest a new corporeal form. You can be killed in the spirit realm and sent back to a checkpoint, but the spirit realm is by and large far less dangerous than the physical. Very few threats can follow you, and the soul scavengers who populate most the spirit realm are little more than fodder for a creature like Raziel to slay and eat at his leisure. So you regain your strength, find a nexus between the worlds, and manifest a new body. It's probably my favorite unconventional handling of death or failure in a game because of its comprehensive and essential connections to the story and lore of the series. Raziel is the beating black heart of the mythos of the series.