I should probably stress that I come from the very different angle than you on the topic, since I genuinely don't like when RPGs are a "comfortable stroll through the scenery", I find them way more engaging when there's struggle to progress and planning is required to win the crucial battles.
I think that's what I view the difficulty slider as being for: though it is something that's hard to get right as it should do a lot more than just be a blend between the player's and AI's hitting power (which, to be fair, it often is).
For me, I do genuinely enjoy the bits of the game where I get to explore, interact, trade and stuff and though the combat is an essential component, for me it's not the main purpose of playing. But for plenty of people it is, so I wouldn't want to deny them that either.
But I think from both perspectives, there should be an interesting mix of steady, reliable skills, some not so good ones and some really way out ones to make things interesting; and I don't think that the latter should be hammered down just to stop some people using them to the point where they could almost be classed as exploits. I figure there's other ways of keeping it challenging without flattening everything down to the same level, which I think carries a big risk of that dullness you mention.
And yeah, bullet sponges. D: I mentioned elsewhere that one of the changes I made to FO3 was to vastly increase the power of the long arms: which had the dual effect of making battles with high-level creatures less of a chore, but also meant if I was on the receiving end I could be taken out with just a shot or two, so it paid to be a lot more careful. Even though I'm generally difficulty-averse, that made things quite a bit more interesting.
