Heh, yes - trust me - there are PLENTY of places to get into trouble... I enjoy writing the death messages, heh.
And as for Battle Difficulty - yes, in the final version we'll have settings for easy, medium and hard difficulty with arcade/battle sequences.
I know I've mentioned this before, but I'll say it again - we're not going with a traditional point system, rather we're going with an achievements system and an "Infamy" rating at the end of the game. Different events and paths you choose will affect this.
Bt