(My english isn't the best but I'll hope it's somewhat understandable)
My party was level 18~19 and it did work, although some fights were annoying (our three SOLDIER friends f.e. - but manged them after some tires, even got a silver bangle from one of them).
Level 30? That would be insane grinding and AFAIR you didn't had this level on your youtube-vids Alyza o.o
The mentioned roulette scene happend to me only ones - bad luck (literally ^^).
Still: This mod is needed! FF VII isn't like it's (mechanic wise) awful successor (kill bosses with one normal hit, etc.) but it's still kinda "easy".
@Chippy: As mentioned above you had bad luck. Some fights you'll about to see are absolutely awesome others will reduce you to tears (like the dragons on Mount Niebel/Nibl if you can't escape them
). F.e. I had massive problems with the first JENOVA encounter and wiped quiet some times. This thing is horrible strong compared to the original. After some thinking I brought in Aerith (+ Yuffie as always) - still hard but worked due the healing-Limit Breaks of the ladys. I can't even think of any other way of beating that beast (except grinding of course - but grinding eliminates the challenge).
@gjoerulv: Although your mod is great and there is a mod that's even more difficult, I believe a "smoothed" version would be perfect for a an broader audience. Heck, I remember wiping before the first Savepoint because of the enemies damage and my limited lousy potions @.@
Let's be honest: The people often argued about the best party (iow: Barret/Yuffie or Barret/Cid or Yuffie/Cid).
In this mod (and of course in Nightmare) due the absolute need of the back-row even for creepers you're always up to Barret & Yuffie (+ Cloud with the ranged Materia (forgot it's name ^^)).
It's not like in vanilla, that using f.e. our infamous Cait Sith is more inefficent, it's simply crucial to stick with the ranged characters in hardcore (or one needs to grind).
But that's just my PoV and I know this mod IS about challenge, while using the mechanics to ones ultimate advantage and not about "what does Red XIII say in this scene?".
Still: If you are ever in the mood to mod some stuff, drop some levels of the enemies (so grinding would not be necessary) and the mechanic/idea of the fight would be intact but not restricting. And it would help stealing (which is sometimes a pain in the ass, because enemies are much higher level-wise than your characters)