Yeah, the first dungeon is pretty nasty. Especially that imp. Daggerfall can be pretty unforgiving, and I like that ab out it. Of course, once you really get to know the game, it gets much easier.
As for going backwards, Daggerfall actually has features the others didn't as well, and the grittiness of the graphics actually add to the atmosphere in many ways. At least to me.
Glad you found a new obsession