TL;DR - immersion and difficulty are not mutually exclusive - beating a game in the hardest difficulty mode without any effort is not acceptable. - this game is (was?) too simple and no amount of nerfing to abilities will change that. It's the AI that needs improving. - I type a lot.
WDYT?
I'd agree with this conclusion about the AI. The AI will noticeably not take elementals into account, I had one fight in particular where my fire elemental summon was getting free heals off the AI attacking with two fire skeletons. I never saw it intentionally use an elemental combo, either, though playing on normal it probably wouldn't be expected to go too all out.