Maybe if they avoided using terms like "Storytime" or "Easy" or "Hardcore" or "Ironman" which tend to lump everything together, but instead just presented individual settings that inform some kind of overall score, then perhaps players would experiment more with the settings? Even something as simple as the name of the difficulty setting can have an impact. Like if the game is overly patronizing and baiting the player by saying things like "So are you a story time carebear ready for bedtime, or a badass ironman?!" And pretty much everyone is going to go with "Normal" or "Core rules" because they don't want to punk themselves out in their single player game lol. I think "cheat" is problematic because it does have a way of making it much less likely that a player explore those options, even if they might vastly improve their enjoyment of the game.
A scored playthrough might be a better approach than gatekeeping it from the initial launch, but done in such a way that its not an either/or zero sum type thing. Just to use an example from the BGEE games, some players might enjoy a more difficult enemy AI for the combats, but maybe they don't care about scribing scrolls into a spellbook. Or maybe someone likes the idea of more monsters, but isn't as interested in monsters doing 200% damage or having twice as many hitpoints or whatever other random idea they introduce to make for a more punishing homebrew. Maybe some players pine for rest/save restrictions, but not the other stuff. It would be cool if the options you selected had some kind of default range to let you know how hard/easy you were making things on yourself, but without using any of the charged terms that tell the player they are holding themselves to a lower standard hehe. Like basically they just need to lie to us a little about it, so their can the player is encouraged not to judge themselves overmuch for playstyle preferences.
A game that comes to mind is Master of Orion 2, where the player could create a custom race with certain bonuses or penalties, but where you had to offset or balance the bonuses with penalties and bring the total back to zero, or else it influenced the potential overall score for that match. I'm not totally sure how that would work in a D&D game, since its basically introducing another meta point that attaches to the character or to the playthrough beyond just XP/loot that we expect. Clearly it would have to be more compelling than just a steam achievement. If selecting more challenging options provided some in-game incentives beyond just the joy of more punishment, or a badge that flashes across the bottom of a screen for half a second, but I'm not sure what that should look like for this particular game.