So I started up a hardcore game with a friend of mine, and we proceeded to have a blast for about an hour. During this time we were under the impression that if you die, you lose all of your gear and have to reroll.
Well, eventually my buddy got a little careless with the grenades and blew himself up.
To our surprise, he simply respawned. All of his stuff just dropped on the ground where he died. He was able to easily return and retrieve it. He even got his money back. There was essentially no penalty at all.
Is this how it is supposed to work? I guess it could be tricky if you die deep underground, or in hell, but if you can get back to your stuff? You're totally fine. That's not what I call hardcore.
My definition of "hardcore mode" comes (obviously) from Diablo 2, where if you die, you're done. Restart from scratch. This is apparently not the case with Terraria.
We continued playing, but we both agreed that it was pretty disappointing that we didn't really need to be as super-cautious as we had been.