Frenzy two enemies on legendary, note how much damage they do to eachother. Toggle it down to novice, and see if they suddenly kill eachother much faster.

Then, try the same thing with a summon vs. an enemy.

Hoping it isn't just my game, but I think difficulty settings have changed to no longer reduce the player's damage, but instead make NPCs take less damage on higher difficulties, and more damage on lower difficulties. This is a pretty big game changer for anything using illusion or conjuration especially on difficulties other than adept. Frenzy is like watching paint dry if enemies are roughly equal in strength, while summons are now terrible damage but amazing as tanks.

Raising the difficulty just make you do less damage while enemies have larger healthpools and deal more.

No, it has never increased enemy health pools. It reduced the player's damage, although now it seems to instead be reducing their damage taken from all sources. Much different than just a health pool increase.