I can't actually comment on the difficulty on this quest, since I have not played it. But here is some food for thought since you plan on raising it:
A. Isn't this the start of the quest? A quest don't really need to start of hard, it just needs to be interesting. The difficulty is something that it should slide upwards throughout the quest. Also, you should never count optional content as required when judging difficulty, it's a design trap that leads to a whole sleeve of problems.
B. And while I don't think either Eppy or NJF are the proest of pros, they are both very experienced quest players. As such you should judge their feedback from that perspective, and consider how lesser skilled players may feel on the matter. The higher the difficulty of your quest, the higher you raise the barrier of entry.
With the optional stuff, would that count having a bit of a mini-dungeon thrown in for sword upgrades? I don't want an "upgrade or get owned" mentality, but I want sword upgrades to be something you SHOULD get, but not necessarily "have to". Armor rings I want to have be optional but useful, and I feel if the cap is Red Ring, I can balance enemy damage better. I mean the original was FAR worse designed. Level 2 with 4 hearts and Wooden Sword was manageable. Level 3 with Blue Ring, White Sword, Magical Shield and 6 hearts was significantly tougher, and without the Blue Ring was pretty much level 5 tier difficulty. I mean it is very hard to gauge difficulty when you're the one making it. There is no element of surprise; you already know what to do and what to expect. Some choices were poor admittingly, such as giving the Summoner a bit too much HP. Also, different play styles seem to influence it as well. The level 3 mini boss is a good example. More defensive players will have a harder time and from testing, I found being as aggressive as possible is the way to go. On the other hand, that same mentality in one of Jamian's quests is just asking for many game overs.
To be honest, I don't want to do anything TOO extreme to the game's difficulty. Just make it a little tougher early on and try to keep the difficulty curve in line with item progression. The fact that I'm scaling down damage is going to make it tricky. Pretty much, I'm getting rid of that god-awful vanilla damage system where Cracktoroks hit for 10 hearts with their magic and Death Knights hit for 20 hearts with their swords. That's not balanced; that's stupid. Then again, neither enemy is exactly good design; either you stun them and cheese them, or you don't and get flattened. I at least want to make it a bit more reasonable; if I can help it, I want nothing to do more than 1 1/2 hearts per hit with the Red Ring, 2 hearts tops.