Answering OP's question: yes, the rest of the game is worth playing, but:
It gets very difficult and at a certain point you're left almost clueless about what to do.
Personally, I'm at the part where you have to get several MacGuffins [http://tvtropes.org/pmwiki/pmwiki.php/Main/MacGuffin] and in between you're free to explore. Something people haven't spoken much about is the multiplayer, which is quite interesting at this point, but be aware that while the MP gets really fun, the single player takes a twist which you may not like (it becomes less linear).
Anyway, the greatest thing about the game is that everything, including the story, is based on its difficulty. So if you don't feel like being punished rather than challenged, this is not the game for you. Let's face it: the game is not as difficult as people seem to think, but it's rather old school trial and error. This is the core mechanic of the game which will keep constant throughout it, so it's a matter of your personal preference on this matter.
However, something interesting happened to me, because while I hate this kind of gameplay, DS somehow pulled me in. I don't know if it's the tense combat, the originality of the lore and setting, or just that I want to beat it already. Anyway, there's another thing which I liked a lot and it's that after all the highs and the lows, all those deaths feel like yours. In other words, you feel somehow attached to your character, and immersed at the same time. Not many RPG's managed to pull this off, but I think that's a great thing which every gamer should experience, whether it is playing Dark Souls or any other game.
To conclude, yes, it is a punishing game, ant it will always be. It's also gratifying, but only a specific public is likely to enjoy it. It's okay if you're not one of those, it doesn't make you a worse player or unskilled to dislike any game, and Dark Souls is no exception. This game is just not for everyone.