Your spiral into madness is exactly the reason I think Dark Souls is one of the more refreshing games of the last few years.
It hates you and wants you to die, and it never pretends otherwise. Unlike a lot of games, though, I always feel like dying was my own fault. It's not like those games where one attack knocks you down, and then the programmers thought it would be a good idea to have the enemies kill you while you're down, with no chance in hell of escaping. It's also a game where I don't feel bad about playing dirty. I wouldn't normally feel good about avoiding direct confrontations with enemies, luring them into fire instead, but in this game, playing fair against enemies who don't is a sure way of getting killed. When you actually pull it off, though, and figure out how to kill some difficult enemy, you feel like a real master.
Then some new enemy comes around and takes you down a few notches, so it's all good. Unlike some games - most games - there's not a horde of regular enemies to go through between interesting encounters. Not only can even the weakest enemies potentially be deadly if you screw up, but you rarely go through more than a dozen or so before something huge appears wanting nothing but your death, stopping at nothing to achieve it.