Yeah, I'm playing on rhythm mode! I think it actually helps getting into the flow of the game, especially in boss battles, those almost feel like they have a coreography to them and I think they would be harder without the rhythm. But you could play in fixed beat mode and still follow the beat anyway, the only difference is that you wouldn't be punished for mistakes, I believe.
The demo hadn't clicked for me before because the beginning of the game is by far the hardest and most frustrating part. After you've done some exploring in the overworld and collected more hearts/permanent upgrades, it gets increasingly more doable and fun, then you can start tackling the dungeons.