So right now Spiral Knights has a fairly basic difficulty scaling mechanism: monsters take more hits to kill when there's more players in your party. It's not a bad system and it serves its purpose well, but I feel it doesn't go nearly far enough.
There's a problem in SK that we're all familiar with: the relative difficulty and payout balance between different levels in a given depth, and the (lack of) scaling of that difficulty with gear upgrades. People wait for 10-20 minutes at elevators for arenas to rotate in, not because of their unique and varied gameplay, but for their reliable and high payouts and, at least compared to other levels at the same depth, their challenge.
So the question naturally raised is how to make all the other level types equally as alluring in terms of difficulty and payout without A: overinflating the crown supply, and B: discouraging lower-specced or just plain unskilled players (we were all there at one point).
My answer? An AI director.
Anyone who's spent a decent amount of time playing through the L4D series is familiar with the 5th player on every team. The AI director acts behind the scenes to dynamically scale the difficulty of the level (within bounds) by varying the loot and triggering hordes and whatnot to keep the levels moving along at an appropriate pace, and to make sure that the group makes it to the saferoom at the end of the level, but just barely. It's that kind of precise difficulty scaling that gives players the rush of "oh my god how did we survive that, that was AWESOME".
So how would this translate into SK, without completely changing the game?
Well, we start with the basic input stats: Group size, gear level equipped, pickups/consumables carried, health levels. Then add in some advanced stats: DPS given and received per encounter, frequency of shield breaks, status inflictions given/received per encounter, pace through the level, frequency of consumable use and so on.
Taking this data, we can then tune the following parameters: Monster spawn rates, monster spawn types (ie status-inflicting vs normal, lower/higher tier monster of the same type), mender/silkwing spawn probabilities, monster drop types (ie hearts/pots/pods vs heat/crowns/mats), all within fixed limits determined by tier, of course.
So as an example, let's say that a small group it venturing into T2 for the first time. They've just got the basic 2* gear, probably of the wrong type for the stratum theme, and they're taking a lot of hits and losing a lot of health. The AI director tracks this and nerfs the spawns somewhat, throwing in some T1 monsters and reducing the swarm size, perhaps eliminating menders/silkwings. The drops are tweaked to give extra hearts, capsules and vitapods at the expense of crowns and heat. As a result, the party is barely able to scrape through the level, but makes it to the elevator with maybe a few revives.
As another example, let's say a guild party with full 5* gear decides to farm some T2 boss tokens. They're ripping through monsters with ease by working together, taking few if any hits, and saving their pots for the boss fight. The AI director tracks this and buffs the spawns somewhat, throwing in more T3 monsters, increasing the swarm size, and adding more menders/silkwings. The drops are tweaked to give almost no hearts and capsules, smaller if any vitapods, and in their place substitutes heat, crowns and materials. As a result, the party health starts getting whittled away when they make small mistakes, and by the time they reach the elevator they've made it alive but much worse for wear.
Ideally the scaling would be such that the average payout for the levels would be roughly the same as it is now to avoid crown balance issues, and should be evened out across the level types (like, I should expect to receive roughly the same number of crowns from any type of level, given my current skill and equipment), and the average survival rate should be more even across different gear and skill levels, within the appropriate window for the given depth. This doesn't mean someone should be able to squeak through to the core with proto gear; the minimum difficulty bounds of T2 or even the levels past basil in T1 should beat them down sufficiently to keep that from being a realistic option, and likewise T1 shouldn't start spawning epic waves of T3 mobs if someone fully geared decides to make a run through the lower levels to avoid the gate fees or to do a cradle and all run.
So the end result would be that players who do well get more crowns, mats and heat, and players that do poorly get more help just surviving the levels and making it through to the next elevator, and nobody needs to wait around at the elevator for an arena to rotate in, or a deconstruction zone to rotate out.
You say you want to make it so that people don't always favor arena levels. The only way this plan would accomplish that is if, incidentally, it makes the payouts for arena and non-arena levels similar. Your plan might succeed at doing that, depending on several very subtle implementation details.
But making payouts similar is also sufficient to accomplish that goal, and can be done with far less work, far less complexity, and far fewer changes to the game difficulty by just...um...balancing the payouts. I described several approaches to doing so in this thread:
http://forums.spiralknights.com/en/node/23459
Your idea also has a potentially serious side-effect, which is that grouping with weaker players will cause the difficulty to scale down, and therefore reduce your payouts. I predict people would start aggressively kicking out of their group anyone with worse equipment or who does poorly in any battle, which will make the game less friendly in general and less welcoming to new players...probably not what we want.