And many have lost their keys, have misused a wallet software, have set an unbelievably high transaction fee. Does this make things not work or is it just a poor treatment of reality?

Yes lots must have lost money in the way you described but there are solutions to avoid it (watchtowers). In other words: This time the cheater is discouraged to cheat. It's a huge step to move from a completely trusted debt-based monetary system to a trustless one. Agreed?