Personally, i would go down the mod route. Upping the difficulty just increases the damages that monsties do to you, whereas mods add a whole new dimension to the game.
Tactics creates additional encounters, makes existing ones harder, sometimes an awful lot. Most of these improvements come about from better AI - improved bodhi won't go after the tank with the mace of disruption for example.
The whole point is to make the game more challenging, by forcing you to think tactically, and for that reason i would definitely recommend it over a difficulty increase. Still, some people on here manage tactics on insane difficulty, but not something i've tried.
Acsension adds a different ending on to ToB and there is another add-on to that called Redemption that gives you the opportunity to redeem Irenicus. I have both installed, but keep starting new games at the moment, so haven't reached the end yet.
All of Westley's mods use the WeiDU installer which means it's very easy to go through and select which individual components you wish to install (or uninstall, so just have a good look at the readme.
The only thing i would caution you about is using NPC mods, as some of those can be extremely powerful and may upset your game balance, but it's all a matter of taste.
Go there for lots of info about tactics, scroll down a little and every alteration is listed:
http://www.weidu.org/tactics/README-Tactics.txt
Sorry i can't be more help about acsension, but am sure there's someone else on here that knows all [img]smile.gif[/img]