Retreat does work, from my experiences just now it simply resets the game to the last position you either did a restart from, that's either the beginning (if you have not retreated already) or to the last retreat point. I have had my killed toons come back just the same way theirs did and at the last save health level. At least you can still swap toons out this way which I think is the point they want retreat used for.
I completed GW earlier, it was just not as easy as before and needed more thought because simply retreating to remove an enemy buff (eg cheewie taunt) now makes you think about the other consequences. I can see why some people don't like it though as with a lesser roster of players it's now definitely harder.
