I run a private server and was thinking of doing a similar thing. Mob hp and damage reduced by 20%. PC xp increased by 20%. The pets might be affected (not sure) but the PC would not so it should balance ok.
Soloing becomes difficult when you get gangbanged by several mobs at once. I expect the above reductions would make it more survivable yet keep it challenging. I used 20% off the cuff but will adjust as needed.
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