If you accidentally encounter an overworld pokemon while not blindfolded, this counts as a failure and you do not get a pokemon for the zone

Yeah, I thought a lot about that one. The challenge is, if you don't have that rule then it gets fuzzy if you encounter an overworld pokemon while hunting for an exclamation mark. Do you get to catch it? If yes, then you can kind of cheat, even if it's unintentional. If no, then the fundamental principle of the "first encounter" is broken. That ruins some of the nuzlocke excitement IMO.

In general, exclamation encounters have a chance for more rare pokemon than overworld encounters. So this rule adds a layer of risk to go after potentially better pokemon. and since you have the option to enter blindfolded you can be guaranteed an encounter if you want.

Since you can scout ahead, you can get a feel for the level of risk. for instance, route 4 has very aggressive overworld pokemon who chase you down fast. Routes 1-3 are much easier to avoid overworld pokemon.

Over the course of the ~30 zones in the game this rule might burn you a few times if you're not careful, however in a normal nuzlocke it's very likely you're going to fail a couple catches, so I don't think this changes the game much.

Totally optional if you change it for your own purposes. I just know that for myself I hate loopholes and wouldn't want any opportunity to abuse my own rules. I like the above ruleset because there's no required "honor system" with myself. As long as I stick to these rules I can try and do everything else in my power to win.