I got killed and chose the no penalty option where it drops me off in town. How do you get back to the level where you were in the dungeon? I was only on the 3rd or so level and just ran back through. One weird thing was that the enemies would respawn on one level and not another on my way back.
Generally, you should only use the 'spawn at town' option if you have a town portal open or if you're near a waygate.
As for the monsters respawning, if you had just arrived at the third floor, but it had been more than 30 minutes since you were on the first floor, the first floor would have repopulated, but the timer for the second floor would not yet have completed, thus it would not repopulate yet.
Portals stay up when you die and spawn in town. It might be an oversight on the developers' parts, but I took advantage of that fact a number of times.
Consider phase beasts and the phase portals they leave behind. Those phase portals don't close until you complete them, and they'll send you into a fresh instance every time you enter them.
I'd pop a town portal right outside the phase portal, experience the scenic vistas (and money, of course) and get myself killed. Hope on the free deathbus back to Torchlight, take my portal back into the dungeon, rinse, repeat.