In my first games 10 years ago I always used to choose the highest difficulty in all of them until I noticed that in most games it only increases the health and damage of enemies, the same game but with unjustified longer combats.
I do agree with you, but they have finite resources, they may never get to do what you're saying, but it's easier to make the game actually hard for those who want it. I have to say, I don't want them to mindlessly add health to enemies, but the fact is, the hard mode in this game is too easy even if you don't have an optimal build fully made for combat.
In my mind the difficulties should represent these:
Easy: don't really care about combat
Normal: with a build focused on things other than combat, you can complete the game without much problem.
Hard: you must focus on combat or get your ass kicked.
Since the game is not like this right now, this new difficulty would be what "hard" was supposed to be. You have to make an optimal combat build to have a shot at it.
