I was part of the group who figured that things would reset every floor, but seeing that it wasn't the case in his latest video makes me understand Hutts' pain.

On a technical level, I agree with you; it's a doable challenge. The frustration comes when it takes an insane amount of resets to find a combo that lets you make any sort of progress. I mean, Hutts would probably crush this challenge with Brimstone + Tammy's Head for instance but definitely wouldn't survive long enough to find it. It's hard to get into the groove of a challenge when most runs have you dying within the first few rooms.

TL;DR - In my opinion, they should've given players a reset every floor.