Yosharian
Arcane
Yes and it does make a big difference to the fight.The in-game help says "Negative levels may be assigned to certain opponents, depending on the Difficulty level. Negative levels resulting from the difficulty setting apply a penalty to Armour Class and Spell Resistance, as well as the standard effects of negative levels detailed below". Then it goes on to list Attack Rolls, Saving Throws, Hit Points, and Effective Level (affecting spellcasting/psionic powers).Normal doesn't apply any "level drain" automatically. Level drain is a rare effect from, mostly, higher level spells and a high level, rarely used, weapon enchantment. This is what normal difficulty modifies. The change only affects spells resistance and armour class - at least according to help files. This means that if the video wasn't showing mid game at least AND the players wasn't spamming the effect AND the enemy had SR (in case of spells) to begin with - the option didn't do squat - at least to my knowledge. Also See "observer bias".
So yes, there is a difference between Normal and Hard in combat but it isn't a big one and not early in game at all. The death threshold change is, probably, the bigger one of the two between normal and hard difficulties. The big difference in combat is between normal/hard vs Archmage, namely the initiative.
Anyway my problem isn't with the way the fight is designed, exactly, it's with the number tuning for an early fight in what is meant to be a tutorial module, and also the way the grids are displayed to the player is super frustrating and not at all comparable to the solid design of KOTC1.
I had an issue last night in later fights where I couldn't quite position my fighter correctly so that he could get cleave followups, it seemed like he was in range because he is adjacent, but the game nopes out of it and says no actually he's two squares away, sorry.
Regardless, I am totally addicted and cannot play anything else right now