I did do a playthrough on Casual once, but still kinda treated it like Classic where if someone died I would restart the chapter. It was nice to have though for those times where it's really hard to complete the level without someone dying because of AI BS. Or like Nah's recruitment paralogue.
I think that Casual isn't a bad idea. I'm sure permadeath was a turn-off for some people, so now there's a bunch of people who are willing to play the game because you don't have to play with permadeath. And tbh, IDK why you'd play Lunatic or Lunatic+ on Classic, unless you're a masochist or something. From what I've seen and heard, those difficulties look ****in' scary and are probably hard enough without permadeath.
I still kinda prefer Classic though.