Right now the only way to not become an overpowered godmode destroyer would be to purposefully heavily gimp yourself in attributes, abilities, talents, and skills.
You are here talking about another kind of balancing than what I am talking about. You are talking about the difficulty progress through the game. E.g. if certain encounters a too hard to too easy.
Right now we just have 3 difficulties. I think the freedom should include the freedom to choose how difficult the game should be (on the fly like in Baldur's Gate). So if we had a slider to indicate how hard should be it would be perfect. Maybe with a small XP bonus as an added incentive to play at high difficulty.