The more you fight, the more the bosses actually dropmore gold. The issue is that the fucking gear and weapons cost a lot, and leveling scales each level a 100 gold. You would need like 100K gold to get to the level to actually beat Megan (including Gear and the time to level up and such). The reason she is like that is to i guess make the player loose their skills with that mind crushing move she does if you loose for entering beforehand thinking she was a fair challenge. The fact that supports this is that there is a scene if you save scum the fight and exit midfight.
TLDR: Just use a save editor to give yourself lots of gold to buy all the gear and levels.