Is it possible that the Epson L3250 is experiencing a hardware failure related to the ink level sensor?

It's certainly possible. The ink level sensor is a critical component, and failure can lead to the printer refusing to print. While it's a more complex issue, it's a reasonable possibility. A hardware failure is a common cause of this problem, and it warrants investigation. However, it's important to note that a faulty sensor can sometimes be repaired, but a replacement is often the more reliable solution.