Hmm... well Ive only played it once, and I played on expert.
I believe the majority of the setting deals with the amount of encounters generated and not the level of the encounters. This is my experience I tested by switching back and forth and running through an are after reloading it at easy and expert.
I would say yes its very difficult at first, I reloaded constantly until my party was around level 8. Then my party hit critical mass. I didnt have any problems until the rapax castle area, where the fight reached close to an endless level. I think I killed 40 of them in one battle before I had to reload to an earlier game, check out the walkthrough and turn those rapaxs off. It was actually generating new ones in the same area as the battle faster than i was killing them.
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