When you do a quick restart in permadeath co-op, the game does not actually flag the save file as having played co-op.
In fact, it does not mark the file as having played co-op until you remove player 2 and add them back.
This means that you can start a co-op single char run with Yves and Octavo, then get a game over and quick restart.
Since file was created with Yves as player 1, the game will treat it as a Single Character Yves run, not co-op, but you’ll still have Octavo unlocked, and player 2.
In addition to this, Quick Restart is currently set up so that both players get to keep their current character when you restart, but this too has an issue.
Let’s say that you’re player an Yves + Octavo file.
If you then exit out of co-op and change player 1 to Octavo, both players current character will be Octavo.
So if you get a game over and quick restart while still being in single player, the game will assign Octavo to Player 1.
However, the game will no longer be able to assign Octavo to player 2, as it is already taken by Player 1, so it instead defaults to Link.
(And if both player had Link assigned to them, it will change player 2 to Zelda)
So this means that combined with the file not correctly flagging as being co-op, you will now have a Single Character Yves file with Octavo + Link as the characters, completely removing any and all difficulty that comes with Yves.
This does not apply to regular Story Mode as a quick restart always take you to the Link/Zelda selection as Cadence.
Below is a video of me showcasing how the leaderboard does not actually flag the file as co-op after restarting until I explicitly remove & add back player 2: