I think in depends on the game. If it's a game like Diablo or Victor Vran, where it has some in-game features to balance difficulty and where farming/leveling up before continuing is possible, it is necessary. But for certain games, i want the game to have better AI for harder modes. For example GUN's hardest mode was just 'insane'. Because it made no improvement for AI but rather made easier to be killed. So you would die with just a bullet and would have to play over and over again. It is just frıstrating.

So this could be a solution: having two different sliders can be a good solution. One slider effecting the AI and how intelligent it is. The other effects damage taken etc.