This is huge, and simply changing health/damage definitely accounts for too much of the 'difficulty scaling' we see in games. Some of that is fine/expected, but I always liked the old Goldeneye model as a good starting point. Instead of making the same stuff more of a chore, add more objectives to force you to use new strategies and spend time in different areas of levels, etc. I'm sure some games still do it, but while optional objectives show up, I don't see the added/removed based on difficulty level very much.
Real shame that the "why waste time making content most players won't see?" mindset more or less killed it after the jump to HD.