Haha, I've not played the game for quite a while now (uber busy), but I picked it back up yesterday. I carried on with the Kvatch castle assault quest (after having lvl'ed my Breton to 24), and it was like the Royal Rumble from Hell. I thought that a couple of the baddies were just really, really fast (b/c everytime I would run around something, there they were), but then I realized there were a few of each variety. Doesn't help that each Xivilai summoned a Clannfear. This is actually the first time I've seen a noticeable difficulty scaling in the game (based on level). I was fighting/running for my life, and barely survived. The poor guards that were helping me didn't stand a chance AT ALL...dead in like 5 seconds, lol. The leader of the guards couldn't stay conscious...it was awesome I was one frantic little Breton...

Yeah,

difficulty scaling doesn't really seem to work very well. Sometimes when I thought things were going too nicely, I added some more difficulty from that bar. After that the place got about two extra enemies and I was so dead.
Seems to be on/off...

And with most of the new enemies that come within leveling it's important to know the tactics how to beat them, that's also pretty frustrating sometimes.

But on overall the game is really good.

As much as I like the TES series, I really hate the difficulty scaling. I miss the days in Morrowind where I would be wandering around on level 3, and accidently stumble into a Daedric shrine and get promptly crushed to death. In Oblivion, you can beat about anyone at level one. Oh well, its still a great game =p

Difficulty scaling keeps the game hard for you, but once you get some nice weapons and armor, youll be fine.