You CAN lose, the mechanics of this game rely heavily on percentage based buffs/debuffs. If the enemy stacks too many debuffs on you, you WILL get one-shot. I suggest not foolowing the guide so closely and only use it for doing quests and such. You can use a save editer to buff your stacks to one shot smaller enemies but be careful of enemies debuffing you DEF and MDEF.
Yup this game is defninitely one of my favs! I think there was also mention of one version of an Aura where she defeats Richard and Alicia but decides to rule Roya. I guess that would depend heavily on the choices yo make on the way though like John Rising, Maid Academy, etc.