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It's not a bug. That is the intention. If you wish to complete the game on a certain difficulty, you have to stay on that difficulty all the way from the start. If it ends up being too difficult and you get stuck, you can lower the difficulty but won't be able to increase it back again.
Congrats on winning hack of the year. Would really love to try it out but documentation seems to be a bit lacking. Could someone at least list out the HMs for this game so that I can plan the HM move users out?