I'm lvl 44'ish hunter by now with decent magic skills doing the main quest at maximum difficulty. Or rather, trying, it's nuts
With main character dieing, it would be utterly impossible to do anything. In the "find the 3rd and 4th book" quest, a few goblins in the sewers force me to make a run for it. This is using tons and tons of potions and poisons. They chase me to the city streets where I get help from the guards. Unfortunately the escape was through someones cellar and house, and the owner was killed by the goblins. It's not always who *I* kill, but accidents happen. Or me, Jeufree, and Martin heading up to that temple in Bruma (no fast travel). I choose to avoid an Ogre in the middle of the road, but the two idiots attack. They were constantly knocked unconscious, despite being top trained in fighting and magic. The horse was lost though, but the battle with one Ogre took a long time. Since I'm not controlling them directly, they must have a high survival bonus, probably unlimited, as they constantly end up in trouble.
Side note: I'd appreciate it if random encounters was a LOT less likely when playing at extreme difficulties. Grabbing Xarxes book wasn't possible without invisibility. Kwatch was a in/out/hit/in/heal nightmare. And invisibility was only solution for first gate as well as their spells take me out with a single hit.
Bottom line is it seems impossible to do the main quest without unkillable (main quest) NPCs, at extreme difficulties. Or the difficulty system needs an overhaul.