I think the modern interpretation of OSR is indeed to play a "scaredy-cat coward" or die. Totally agree.
Every game I've seen in the OSR movement and every game I've played has been reinforcing this concept.
Characters are worthless, have little chance of success against even mundane situations, are typically evenly matched or even underpowered compared to even the most superficial enemies.
And yes, that's not fun for many players. And it's frustrating for GMs who want the game to feel exciting and heroic, instead of boring slogs of routine 10 ft. square searches, an adventure of one battle with 2 kobolds that requires 7 days of bed rest to recuperate.
That said, this isn't nearly the game that I came to the hobby with. The reason why - we BS'ed it. We didn't give a damn what those books said. We created badass characters who invented their own spells, laid waste to massive cities, and conquered the gods.
OSR does a bad job of capturing the badass, because it's too preoccupied with presenting a faithful recreation of the past instead of the way we actually played it.