Big spoiler for episode 2 of LiS:
Suffice to say, I love this bit because the challenge posed by the question gives the player a real sense of accomplishment. The dialog not only referenced my actions, but also engaged my memory (and a few of my critical thinking skills).
I'll admit that I actually reloaded after
the first time. I might purposely fail on a future playthrough just to see what changes. I'll definitely give LIS at least one more run, but I only started it last month and I hear Episode 5 is just a couple weeks away, so I'm waiting until then to do anything more with it.
Any level of fail state would be a plus like:
-Completing the rest of the mission with a de-buff (max shields = 50% or something)
-Losing access to a squadmate's special ability
-Death (supposing, as you said, it were immediate)
However, I've always fantasized about the idea of having decisions that get you killed down the road if the game had a meta-game mechanic like Life is Strange that warped the player back in time, have them pick one of the correct decisions (so they're not repeatedly failing), and warp them back to the future recapping the events that changed.
I guess ME sort of does that in LOTSB - if you drop your heavy weapons when Vasir takes a hostage, you have to fight her without them.
While the LIS mechanic works within LIS, I think it would be tricky to introduce it into most other games, unless it was to be presented as a straightforward, unmasked breach of the fourth wall. Otherwise you can probably only do it if the game already involves concepts like alternate realities or time travel.
I wonder what would be an effective way of gauging fear/stress and the correct time to initiate a taunt/negotiation mid combat. unless there's a challenge to the non-lethal finish, it would basically be an insta-win when you yell "drop your weapons."
I think there are ways you could do it by tying it to your character's history so that it isn't just an "I win" button. An example might be the Blue Suns in the Omega slums who start shooting at Shepard because they think humans are spreading the plague. If Shepard saved everybody on Feros and Noveria, maybe (s)he can shout, "I'm Commander Shepard and I'm here to help *cure* the damn plague!" and they believe it based on past reputation. Or when you get to Harkin's headquarters, if you talked to him in ME1 and maintain the same tone that used with him then, you can convince him that he's better off just talking to you.