That's not it. Remember when you're originally getting a blood transfusion to become a hunter, you're told "You can treat what happens after this as a dream" more or less? The entirety of "The Hunt" is a shared dream of Yharnam used to interact with the Great Ones, and so that the Great ones can create offspring. The Hunter's dream is hosted by the moon presence, but the nightmare is hosted by Micolash, and everything else seems to be hosted by Rom and Amygdalla.
Remember when you murdered Micolash he whines "I'm waking up. Now I'll forget everything!" basically, a perma death in the dream means forgetting everything that happened in the dream and going back to the real world. HOWEVER, I do not think this means that everyone who enters the dream has to die and forget to exit it.
My theory: the point of the hunt/dream is for the people of Yarhnam to gain insight into the great ones to bring into the real world, turning into a beast causes you to be stuck in the dream unless you're forced to accept your death, which is what the hunters are for, they're the emergency ejection system. Hunters themselves have to be able to leave the dream when the job is done, which is why there are Hunters of Hunters like Eileen to force other hunters to accept their death and make them die a final dream death once they stop dreaming. Gherman exists to mop up the last man standing, he's unable to leave the dream himself because he's bound to it by the Moon Presence.
Evidence:
Multiple NPCs are aware of past hunts, they're aware of hunts always ending sooner or later. That's why they stay indoors, they don't want to forget about the hunt and what little knowledge of it they bring home with them, so they try to stay alive and keep themselves from going beast, that's why a lot of the NPCs are outright hostile to you bothering them in their houses(also explains why you hear a couple of houses praying to be blessed with blood, perhaps that's the reward for surviving to the end). It's probably also why the guy who gives you the flamesprayer is glad that he'd probably die before he turns into a beast.
Then you have the hunters who don't dream anymore. Djura and Gascoigne are major examples and both of them have bandaged up eyes as a signifier of their inability to dream. Eyes are related to insight, it's repeated multiple times throughout the game that the more eyes you have the closer you are to the great ones, and they've run out. It's also worth noting that if you go back to the hunter's dream with 0 insight the doll goes back to being inanimate, as well, so it affects your perception of the dream severely. The normal NPCs don't seem to have the same problem(they have functional eyes), probably because they're not bound to the Hunter's Dream(or the moon presence) at all in the first place.
Perhaps the reason why Hunters need to be ejected from the Hunters dream while NPCs do not need to be is because of the blood used to create hunters in the first place making them close enough to beasts that they cannot die in the dream until they've been forced to accept they're death(or accept it on their own) and forget everything. In the true ending you "transcend the hunt" by becoming a great one yourself, and as such you no longer need to be killed(Though you're probably a permanent resident of the dreams now).
