Keep it as it is. Removing the cooldown to zero for failing will promote Tryharding. People will constantly trying three cities on hard on their horrible cars they are too lazy to level up with, resulting with less players available to find on lobbies. That's what i thought. Increasing the failed reward is still reasonable, it's unreasonably low currently. Picking hard difficulty is sort of a gamble where it depends on you that you will do a fuck up in the run or not, at least on later car classes or bigger scores although i don't really care about it since what i do is just go as fast as i can and pray for a toptime, but surely it bother others who are still on the grind.
Yes, easier difficulty exists but you don't really know if the hard difficulty would be actually hard or not since it's randomized, sometimes you can even have 20 seconds spare to finish, and it's always so tempting to pick hard difficulty.