The AI is definitely bugged when it encounters non-trivial terrain. I had one fight where half the enemies walked themselves against a wall and just sat there doing nothing until I killed off the other half.
I understand that feeling of wanting an uncompromised challenge, though. I wouldn't mind a "Hardcore" mode where resistances are capped, and it's also harder to get to the cap, etc. But for the average player, or those who are very used to hand-holding RPGs these days, I think elemental damage healing is something that could make newbie players start to think out of the box and really begin to enjoy these more free styles of RPGs.
