Well how about if it just made combat more lethal? So that foreg: even with heavy armour on getting hit by a steel warhammer would knock you around badly and almost kill you. And the same rules apply to enemies.
Oh just read the "tied solely to combat" bit... hmm so you want it harder but not just in combat? Do you mean reintroducing stats? Someone mentioned customizable armour like in morrowind (ive never played) but that does sound like a nice touch... Also a barber would be great.
Indeed, combat being more lethal would be perfect if the rules applied to both teams. I find the best challenge in a game not whether I have the patience to repeat the same tactics/motions to kill an enemy because he has more health, but because I'm being to reckless or using my brain. I walked blindly into a room and got ambushed. I carelessly stepped over a very obvious pressure plate. I did not access my enemies.
I think the real challenge comes from survivability, not having to beat on the same monster longer. Make money harder to come buy, making it more difficult to find the proper supplies. Make potions require more ingredients. Give me some drawbacks if I haven't bothered to make my character sleep for 3 days.
I'm really throwing these out without actual thought on the balance, but these are just examples. I think I'm going to devote my time to a special difficulty mod when we get the SDK. See if my vision is broken, or it might make for an interesting game.
You don't have to say anything. You're awesome -- no that's not sarcasm. I like you. There's nothing wrong with people expressing their concerns/complaints (even if, admittedly, rather moot) and it's perfectly constructive to suggest work-arounds for the interim. You're not derogatorily telling people their concerns/complaints are invalid, and that they're just not doing it right.
Edit: So, anyway. What's your rule for potions?

Is that really without sarcasm?! Its so hard to read into it, haha!
I'm not really sure how I want to handle potions yet. In general I already refrain from using health/stamina/magicka potions as much as possible. I hate when a fight devolves into a potion chugging contest. Its not always possible, but I've gotten much better at it. When it comes to buff potions, I do tend to assimilate my enemy's attacks/magics/equipment to see what buff potions might be useful. Frost resist. Fire resist. Armor buff. But I think I carry too many of them.
I'm not sure whether I should limit the number I carry. I think I should. But I'm uneasy about it. So many different situations. But perhaps limiting health potions would at least add a possibility of death if I go stupid.