The problem with giving costume rewards is the specific costume(s) handed out; absolutely no chapeaus or exclusive energy pack promotional costumes or their values will immediately drop to nothing. As long as they are new and/or not tradable upon previous release, it would not cause an economic issue to reward increased difficulty with costumes. Accessories are the same in terms of promotional wings, those obnoxious twin tails, and other silly things they pulled out of their belly button.

Yes, they have been making the game unnecessarily easier. Changing the swivel ability on Wolvers and zombies from being able to turn immediately at will to the player is one thing, but completely removing that turning ability is another; it could have been slowed/delayed or limited to a certain maximum degree, but instead they threw the whole thing out the window and glued the double jumping attack which annoys users who stand still for a couple seconds while it is facing them. Wolvers got nothing in exchange for the loss. Retrode health seemed fine from personal experience, increasing health on other enemies a little may have made their own health somewhat more appropriate. Constructs are sturdy, like a brick wall; except they are chasing you, vomiting lasers with their face, swinging giant tree limbs, et cetera. Constructs have seen better days.

Bombs and guns did not need a buff, swords needed a nerf; a few guns also needed to be nerfed (Blitz, Pulsar) in some manner. Has anyone else tested using a Polaris and a Storm Driver in Firestorm Citadel? If you know how to use an Alchemer, Storm does far more damage than Polaris can even pretend to. What does Polaris do? Knock everything away from your teammates when they want to melee off the screen forever. Also, Brandish lines; to stay consistent with Alchemer values, Nightblade should have more base damage than the elemental lines due to its lack of status affliction ability. The shadow Alchemer has more base damage than the status afflicting ones. This has been discussed in another thread, but nerfing the elemental Brandish line damage a little would make Nightblade more useful in comparison as it lacks a status; not a damage buff for Nightblade, a damage reduction for the elemental Brandish lines. Not cut its legs off, trim its fingernails; I can grind out some balance notes here later upon request or free will.

With the upcoming "Danger Rooms" we may receive the greater difficulty we have been asking for, though they may prove to be a disappointment. It might be good, but it might not be. Hurr.

The tier system is supposed to signify difficulty, though often times users have been disappointed. What this game really needs is more problem solving based gameplay, not pumping health and damage into what we already have; all that would do is make swords more useful than they already are. "Enemy in front of me, me hit enemy good. Smash smash. Derp herp." When these neanderthals encounter something which easily outsmarts them they throw a tantrum and whine about it until they get beaten down with jelly filled shoes baked in honey and almonds. The competent user finds a way to outsmart this enemy and conquers where brute force failed.

What about only two levels? Something like that:

Easy:
- Zombies and Alpha Wolvers don't have tracking ability
- Retrodes' beam attack has a significant delay
- Menders are unable to make melee attacks with wrench and cast Ember Bolt
- Red Rovers and Gremlin Scorchers flames burn for half as long and move about 20% slower
- Oilers burn time reduced 66% and movement speed reduced (similar for Quicksilvers)
- Phantoms health reduced and inactive period after death increased

Normal:
- Zombies and Alpha Wolvers have tracking ability
- Retrodes' beam attack doesn't have a delay
- Menders are able to make melee attacks with wrench and cast Ember Bolt
- Red Rovers and Gremlin Scorchers flames burn for pre-nerfed time and move with pre-nerfed speed.
- Oilers burn time and movement speed are not reduced (similar for Quicksilvers)
- Phantoms health not reduced and inactive period after death not increased

It has been tried in many games, MMOs and others, and it doesn't work as well as it did on paper.

You cannot just double, triple, or half an enemy's health or damage and expect it to work well. That is artificial difficulty. The entire game has to be designed around the difficulty, especially including enemy dynamics, AI, and yes, attributes such as health and damage. While I do agree that T3 is too easy and Shadow Lairs are too expensive (Again, artificial difficulty of the cost of the key), simply adding options for making enemies be able to take more hits wont work as well as you may think.

What we need, as The-Rawrcake mentioned in the post above mine, is a new 'tier' that has more difficult mechanics in addition to the additional difficulty in attributes. Yes, hopefully danger missions will give us the challenge this game desperately needs.

EDIT: Alright, I finally read Luguiru's large comment.

Yes, especially about problem-solving based gameplay. While I don't exactly want them to give us a giant Rubix cube we have to solve to open a door while we are being attacked by twenty-six respawning retrodes that shoot five lazer beams, I do think that more strategy should be involved during combat. I was extremely disappointed with the lack of strategy Vanaduke took. The Roarmulus Twins and Jelly Queen, before you had enough DPS to down her in a couple of seconds, were nice tactical boss fights, but they were still too easy and could be mastered in minutes. I'd love to see some extremely hard stratum/tier/boss/mission that has dozens of unique mechanics happening at the same time and makes wiping several times in an attempt 'average' without giving a mob the ability to throw rocket-launching nukes that blow up the entire map for 9001 bars of health in damage per player.

Time investment requirements does not equal difficulty, and it seems that you haven't realized the sheer amount of F2P players that are in the meta-game that are bored and want more challenging content. Free or CE-purchased, harder content would be better for F2P and P2P players.