WELL. After two temporarily-gave-up-then-lost-the-save-before-having-a-chance-to-resume playthroughs (at Jenova-BIRTH and Dyne respectively), I think I've finally gotten far enough to give some decent early-game feedback.
I don't remember my levels at every point in the game, but I do remember I got to about level 8 for Guard Scorpion, I was about level 17 on reaching Jenova-BIRTH but grinded to about Level 20 to be able to beat her, and I'm currently, just before Nibel Mountains, using Lv31 Cloud, Lv28 Yuffie and Lv30 Barret.
I've beaten all optional bosses I've found up to this point except Midgar Zolom (so, Silver Chocobo, the guy guarding Titan (forgot his name), and Lost Number), and wherever I've seen one, I've beaten any new enemies I've found (Ryoka Xenophobic was quite interesting, if not too challenging) at least once. Overall, I have to say it's really good. I've actually found myself using Sadness, the Barriers, and even Defend - things I almost never do in a regular play (but am quite familiar with the concepts of thanks to excessive challenge plays of FFX).
** WALL OF TEXT WARNING - Reviewing pretty much the whole game so far. Note that there may be some strategy-related spoilers ahead, so don't read if you wanna come up with your own ideas!!! **
The 1st reactor, I have to say, I think there was little need to make Lv1 the starting level. It just makes this place require a bit of a grindfest... which itself is made easy (but tedious nonetheless) by simply beating a Sweeper once, then using the Bolt Plume (or was it Swift Bolt? I always get the two mixed up) you get against another Sweeper (even better if they appear alongside other enemies, then you may get a couple of Potions as well). They're also very effective against both of the first two bosses (I ended up using my spares from grinding against Guard Scorpion but had none left for Air Buster). The lack of healing items also leads to a similar matter of abusing the Bolt Plume cycle to get potions (since you're likely to lose more than you gain any other way). However, I will emphasize that the 1st Reactor is pretty much the only major criticism I have - everything else is just small things here and there, and most of my feedback is actually pretty good.
The 2nd reactor was pretty fun. Air Buster is actually a challenge now, but still a reasonable introduction-period boss. I like how you can pick up a few pretty neat items (Deadly Wastes for one) if you put a bit of effort in, yet unlike the 1st Reactor, they are far from mandatory.
The slums are really nothing special, but I have nothing bad to say either. Maybe making Hell House just a tad tougher would've been nice, I remember when I very first played the game finding them to be quite a frightening enemy (even if they didn't really hold up to that impression as well as you'd hope) and had been quite interested to see what this mod would do with them. But I think that's more a personal thing than anything else.
Train Graveyard is perhaps the place I have to say has the best degree of difficulty adjustment. Not so hard that you have to grind insanely or see Game Over every 2 minutes, but not so easy that it appears untouched. Good work here.
The Reno fight, I have to say, was somewhat a letdown. The only difference I noticed was the Pyramids took more to break.
Shinra HQ... hmm. The random encounters weren't that much improved until the few highest floors (where they were quite good), seemed to be just a bit of HP buffing. Sample was a bit more of a challenge than usual. The elevator fight wasn't that interesting, but there again, it never was in the first place. The real highlight here is the Locke, Theo & Venus battle... on all 3 times I've played through, I've found this battle very challenging yet mostly one of strategy - I have never had to grind or rely on luck to beat it, just refining my strategy has worked well enough. A huge thumbs up for that one. Motor Ball is pretty good, but nothing too special.
Upon reaching the world map, the encounters seem alright. Not going to touch Midgar Zolom yet at the damage he's doing o_O. Silver Chocobo had me stumped for a while until I realised he never attacks except as a counterattack. It was made easier again when I realised he was vunerable to Mindblow (although it does take 3 hits to get rid of all his MP), pretty much getting rid of all his attacks. My only comment was that, since you're meant to *need* a Chocobo at this point, and you have no way of preventing Beserk, it was a bit unfair to give one of the tougher enemies that appears with chocobos a way to inflict it. Random encounters around Junon seemed to be pretty decent. Yuffie was still painfully easy to beat though.
Bottomswell seems pretty unchanged, apart from using Big Wave less than what I remember - in one of my runs, he only ever used it as a final attack, not during the battle.
Jenova-BIRTH is probably my biggest complaint apart from the 1st reactor. As I said before, in one of my saves she was my quit point, I got sick of trying. Both of the other two I have the same issue - she is not hard, just cheap. I like how she has a weakness to physical attacks, but unfortunately, her difficulty pretty much just comes from that she inflicts around 4 times as much damage per turn as anything else you're used to by this point. Keep in mind that the last really major boss, Motor Ball, had 10000 HP and at worst could do about 400 fire-elemental damage to everyone in one turn, or about 200 non-elemental. IIRC, the single-character damages are about the same. Skip to Jenova-BIRTH, she can potentially do nearly 1000 non-elemental damage to everyone in one turn, as well as having over twice the HP. To a single character, she can do 1200 in one turn (triple W-Laser). Not only that, but you don't even know how much damage you're going to be up against - since it's random how many times she attacks per turn. This is a point where you have to either get lucky or majorly grind.
Random encounters for Mt Corel were very well balanced, I felt. Probably would've been quite challenging (but still reasonable) had I not had to grind for Jenova-BIRTH (which would've put me 2-4 levels lower at this point). Desert Prison's ones were somewhat disappointing. Dyne was a very good battle. As opposed to the last one which was pretty much a matter of brute power and survival, I found Dyne to be interesting - while at first it may seem like grinding Barret to insane levels is the only way, so that you have time to defend and attack, a bit of experimenting revealed a vunerability to Poison. This takes the offence side out of the way, leaving you to focus on survival, which at the level I was at, worked out quite nicely - two attacks (which later he starts doing in one turn) would be about equivalent to what you'd heal from a single Cure2, and you'd usually have a spare turn to throw a bit extra damage or if needed an Ether.
After that I did a bit of enemy skill hunting. Didn't try Beta yet but got Aqualung - needed Sadness and Big Guard to survive that at this point, and even then it still killed Yuffie and left the others with under 100 HP each! I also Mindblew the Harpy after it used it, luckily it didn't use Aqualung again - I didn't actually notice until it was nearly dead that Mindblow only took half its HP. Also, for some reason, when hitting from behind, Barret's Big Shot did over 10000 (not a typo) damage on a Cazador, at a point where it's usually doing about 600 on a front hit to most enemies. Glitch, or do they just take HEAPS of back damage?
Turks battle in Gongaga was pretty standard. The battle for Titan was a bit too easy, just a matter of keeping your HP up and dishing out damage.
Cave of the Gi was quite interesting. The enemies were a decent challenge (although the Stingers still being vunerable to Mini made them a bit too easy... once I remembered that they were, which wasn't until I fought the last one xD). As I mentioned before, Ryoka Xenophobic was quite an interesting enemy. I'm guessing there's no way to change his death animation to the normal enemy one though? Gi Nattak itself was quite easy, although his damage was quite formidable - but unfortunately, even if you've fixed up the Phoenix Down loophole (which I'm assuming you have, I didn't actually try), he still takes very high damage from Cura, and taking that away would pretty much kill the whole concept of this boss.
Lost Number was actually the first boss I didn't manage to, in the end, beat with all 3 characters alive. I lost to him once - noticably, the first time he went into physical form, the second time into magical form, so I can provide a bit of feedback on both. Overall, Lost Number was a really good and challenging battle. I needed to Poison him to defeat him, and ultimately I did end up relying on that for the last 2000 or so damage once he had me down to one character and no spare revival items - before this I was barraging him with physical hits from Cloud (doing about 600 each - he had Long Range, Murasame and Power Wrist) and Aqualung from Yuffie (about 1400 a hit vs Lost Number IIRC), while Barret healed. Was also keeping Yuffie (but not the others as they could survive everything except Lost Blow outright) under Big Guard. Very intense battle, but I do have to mention that physical and magical forms are very unbalanced to each other. While magical may inflict Poison once in a while, physical does nearly four times the damage... I'm also going to take a wild stab in the dark and guess that Lost Number isn't intended to be fought the second you get to Nibelheim on this mod, just like with Midgar Zolom? I actually suspected that before even fighting him, only to pretty much consider it confirmed once the fight started - but with how close I got, I thought I may as well keep trying anyway.
Well, that's as far as I've gotten so far. I'll give more feedback once I'm a bit further (may be a while, I tend to get a bit procrastinative whenever I reach Mt Nibel as it's probably my least favorite part of the game until the boss) - looking forward to what's ahead, especially Materia Keeper as he's usually the point I start running into trouble in a regular game.
Overall, my highlights so far would have to be Train Graveyard, Locke Venus & Theo, and Lost Number. Downers would really have to be the first reactor and Jenova-BIRTH. Hoping the rest of the game will be good!