Whew, I skimmed the above, but rest assured this is not something that we've been blind to. The plan, so you know, is this:
1. As you gain enchants, you're also unlocking unlockables, many of which are making for harder enemy types and patterns. Thus the overall difficulty of enemies are growing as you are growing power. It's a sub-linear growth, but the idea is that you'll need those enchants in order to deal with the harder enemies that you're unlocking. That's more or less their purpose.
2. Right now the difficulty of enemies is out of whack in general, being far too few hits to kill most stuff. This is almost a separate topic, but it's just a general note here.
3. When it comes to your upgrades to your character, this is more intended to deal with the higher tiers of enemies. You upgrade your health or whatever else through upgrades and through upgrading spell progressions, while enemies (and your allies) get upgraded through the tiers.
4. Actually, having a tier+1 of a spell is what we're going to be aiming more for in terms of "baseline" damage to most bosses in particular, because so much of the time that's what you'll have. First order of business upon getting to a new tier is getting tier+1 spells. Of course, this makes tier 5 the hardest, because you can't get tier+1. Which is the idea.
In your average RPG game, you have a linear progression that goes something like this:
Character Level 1 -> 99
Equipment quality tier 1-> 10
Enemy Level 1-> 60
And thus you can combine your own level and equipment quality to take on enemies of whatever level, and you can massively over-level enemies by the end. But this is not an RPG. In your average adventure game, you have something like this:
Character health 3 -> 20
Character equipment options 0 -> 20
Enemy complexity/health/power 1 -> 20
And the balance THERE comes from hand-tuning everything. It's not possible to "over level" the enemy, unlike an RPG. This is getting closer to what we're doing, but still doesn't really model it. Here's the model we're actually using, which actually has two progression tiers:
GLOBAL PROGRESSION TIER
Enemy complexity/health/power 1 ->
Character enchants 0 -> ?? (via enchant containers)
Character available spell power 1 -> ?? (via unlockables giving you new and more powerful spells to deal with the inflated enemies).
PER-CONTINENT PROGRESSION TIER
Enemy health/damage/speed 1 -> 5 (via continent tier) -- or even up to 10 if you like dangerous spelunking.
Character health/mana/power ?? - ?? (via upgrade stones) - this is a very fuzzy sort of area, but it all stays within certain bounds; you can over-level enemies, but only to a point
Character equipment quality 1 -> 5 (via continent tier +1) -- and not being able to go higher than 5, unlike enemies in caves
What you wind up with, then, is two separate progressions, one of which is a per-continent loop and one of which is global. What you are rightly recognizing is that neither is complete quite yet, or fully balanced, but that's something we need to fix in the next 3 weeks. Key points about this design:
1. It provides long-term ways to improve yourself and get new challenges even beyond the first three continents.
2. Each continent is still kind of like a "New Game +" in the sense that many aspects of the game "reset" on each continent.
3. It is definitely possible -- and desirable -- for players to be able to over-level enemies in an RPG-style sense, but that gets progressively harder to do the longer you play through the natural interactions of the mechanisms noted above.
One of the things I already have planned for the next release is a massive shift in combat difficulty effects. I'm noticing that on hero difficulty, enemies are about 1/3 as powerful as they are supposed to be, and that's without my using any enchants.
In the meantime, even with that change, you will notice for a while that things will be a little on the easier side. Why? Because we've added all the enchants before we've added all the new enemies. So you get your side of the global progression, but the enemies don't yet have theirs. It's out of balance simply by virtue of our work not yet being done.
Hopefully this puts your mind at ease a bit, and explains where we are going with this, anyhow. What you said didn't come off as a rant, but about a month ago I was going through the same though process you just were (the reason being that I knew what we were planning at the time, and you're just now seeing it in action). The solution outlined above is what I came up with to combat this problem, and is why we proceeded along the current development path between then and now.