It doesn't state in the rules about dying when using IGT for individual levels.

So technically I can have a 3 hour run of one level where I keep restarting over and over in order to make each checkpoint segment perfect?

Yes, that's the point of an IL. The only stat that matters is the time displayed on the final results screen.

*Goes and gets 99 lives.

I know in other sonic games and most categories, time including deaths is necessary. I prefer the rules for DX, allows manipulation, and multiple moments of extreme scrubbiness.