A higher difficulty level sounds like a good idea. It could do things like increase the power of damage-over-time effects (or, if they'll be changed in the next patch, leave them at the current level or higher).
I am not sure if it is possible for increased difficulty to add extra items (arrows, potions, maybe even scrolls if the enemy can use them) to enemy inventories, and remove some of the free resurrection scrolls in chests. Maybe boost enemy resistances to some damage types to make it matter much more what weapon types you use and make the armour-ignoring elemental attacks on enemies less effective.
That's the kind of thing which is makes much more interesting difficulty levels than just a health decrease/enemy damage increase. I do understand that is a whole lot of balance changes, and may not be a feasible thing to add at this stage in development though. (Maybe slap on a "Are you sure? This difficulty is not fair." warning.)
Replacing one creature type with another of similar power but with different capabilities can also work to this end if it affects the synergies between creatures or even just increases the number of things that the player has to take into consideration while fighting them.
This also is a great way of increasing difficulty without needing to change raw numbers much. An different enemy composition can be much more challenging even if you remove some enemies and replace them with others.
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However, some of these changes are not going to work in D:OS because you can change the difficulty mid-game, it's not set from the start. Because of that, the options are a lot more limited.
