My friends and I have played this way from the get-go. When we lose on a battle, we do not draw cards. The only way to draw cards is by not participating in the battles at all. I'll try it the right way next time, but this way worked nicely as well.
Owner of original 'crappy art' GtR and pleased about it.
Yes, we played it that way too. Adds a new dimension to the game in that you need to keep your hand fueled by not entering the battles. Probably better than the original rules.