The problems you describe are absolutely spot on, but I'm really skeptical about adopting "hard modes". I don't think there should be only one universal set of content for the entire playerbase with bells and whistles either added/removed to cater to different levels of play. I worry about easy mode players being saddled with the highly unsatisfying "but I can only beat it on sissy mode" and hard mode players being underwhelmed with still re-playing the same content just with a twist.

To me, extra challenge absolutely needs to be provided by unique content and unique rewards. They can always make it so more casual players can work their way up to the harder content over time, so it won't go to waste on only the top 1%. I think giving even casual players realistic long term goals provides more excitement and motivation than "maybe one day I can do the same content but on a harder setting".