This is good analysis. There are limitations to what Larian can do to make Honour mode "harder" and we as players can always voluntarily impose limitations on ourselves to make up for that. I think Larian could do things to better facilitate that, such as making the Honour ruleset available in Custom mode (you can get this by purposefully dying in Honour mode and then continuing, but we shouldn't have to jump through those hoops).
They could also expand the Custom ruleset so players can make it harder. For example, if I could, I would set the Camp Cost multiplier at higher than the maximum allows.
I do agree though about the AI. For every time the AI does something unexpectedly smart, there are at least five more times where it does something stupid, like Misty Step directly into a Wall of Fire or Dash, sprint to a location, then Misty Step back to where they were. This is still happening even after patches even on Honour Mode. So that could definiitely be improved. The AI in D:OS2 was way better.
