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Bummer about the difficulty, I guess I'll settle on single well-balanced difficulty level. By the way - what does the in-game difficulty setting affect?
The "ingame difficulty" has no general affects on combats or riddles/quests, everything must be prepared.
Lets say we have 3 combat difficulties and adjust the nessie/2 manta encounter.
1st i remove all 3 monsters from location, for the "easy" setting i could spawn 1 manta and a slightly weaker Nessie,
"normal" respectively "no changes" spawns the original monsters and "hard" 3 mantas + a stronger Nessie.
The encounter can be spawned by trigger plane/sphere on 1st arrival in location, or directly in front of the scene.
Not too complicated, only requires some time to set up, but you could adjust only some major events.
If the effect is restricted to a location, every Trigger or Dynamic Object will do,
for globals i trigger same NPC/script in all locations (this keeps the number of NPCs low, as its limited to 256)
the different actions set their specific locVar and points to the NPC trigger,
the NPC script "recognizes" the triggers with locVar conditional jump,
followed by fact conditional jump according to selected difficulty.
The advantage lies in switchability of difficulty during the game, you can always set/reset a fact or locVar
and change an encounter if not already spawned(even that may be undone)
E.g. Braffit would offer, of course for a nomonal fee, to send a prayer to the higher forces,
or sells a spcl amulet which occupies ID#660 in items database(see below)
"bloodlust" yes, OP, maybe keep as is and assign -5 pie and -25 to -50 mental resistance?
Backdraw will reveal at the new encounters with high rate of insanity spells :D
btw, Bloodlust has another special property,
besides the 3 artifacts it is probably the only item that triggers a fact(#206) if posessed by the party.
(see NPC script block1 of Antone)
Its tied to item ID, so we could keep the sword by placing a clone of it into another slot,
and use ID#660 for a major quest item etc, or the amulet above.
nearly forgotten: remove the cane from game
p.s.
bloodlust can be nerfed by adding more attack modes,
it appears the game engine chooses them randomly