We don't need FATEs to scale to the number of players that completed it LAST TIME. We need FATEs that scale to the number of people in the area THIS TIME. I am having a hard time believing a professional game development company even came up with such a badly thought out system.
This is difficult because it would have to be done on the fly. You can't really scale an NM up or down after someone has started fighting it, and "kill the mobs" fates could only reasonably scale as new waves spawn. It would be unfair to the people already fighting if the monsters suddenly gained more HP because some people who might even just be passing by entered the FATE radius. You need to consider the reprecussions of your ideas.

Most of the time participation in fates will be fairly consistent so this really isn't the issue you're making it out to be. If the participating population suddenly decreases, it will only be more difficult once. Not a big deal.