Stopped and (re)started several times trying to find something that felt right for me, and the only way I've found to play that doesn't feel overpowered/broken/dirty is Sword & Shield on master difficulty, with a slew of boycotts across the board. Because of timing, with blocking, dodging, bashing and staggering, there's a lot of room for depth in the encounters. I've been killed by a bear that surprised me, even using potions, and then beaten it my next try without using any, because I learned how to fight it (When it stands up, dodge, don't try to block!). It was rewarding, you know?

For reference: One-Handed, Heavy Armor and Block, with Archery and Alchemy on the side, pretty much. Oh, and the slew of boycotts...
No Enchanting
No Smithing - No upgrading, either.
No Stealing - I feel dirty helping myself 'free' loot.
No Stealth - ESP! Also, just plain breaks AI.
No Magic
No Selling Alchemy produce - Too much free gold!
No Companions
No Pausing - Hotkeys only! Applying poisons being the only mini-exception.
No Backwards Key - Spartans never retreat! But yes. Really.
No 3rd Person - It makes melee a lot more fun, and exploring immersive.
No Skill Trainers - I always felt dirty afterwards...
No Grinding Skills - Duh!
No Compass
No Fast Travel
... I think that's everything.
:|
Using potions is overpowered under any circumstances by your logic.
Because it makes sense that you can chug 300 potions inside of one minute to keep yourself alive in even the toughest of fights.
Oh, and picking up the controller is overpowered, as well, naturally. That gives you a massive advantage over the AI, because you are not hampered by scripting.