I had a thought about an alternative way to handle difficulty levels in Diablo III. One of the complaints I've heard about newcomers to the franchise -- and even a lot of people coming back from Diablo and Diablo II -- is that they have to play through the game three times before reaching the end game, and that at least two of those playthroughs are trivially simple. The monster power system helps with this a little bit, allowing you to at least blow through those early parts of the game faster if you have very good gear, but while it increases the HP and damage of monsters (and their XP reward), it doesn't increase their complexity. Normal mode monsters still only have one affix.
It's true that this game is basically about running the same content over and over, so I feel like the real issue to address is not necessarily having to run the same content over and over, but the lack of difficulty due to lower monster complexity at lower levels, rather than just the HP/damage. So what if you could choose any of the three initial difficulty levels when starting the game? If you're worried about new players getting themselves in trouble, force them to reach a certain level or story beat to unlock the higher difficulties initially, and then allow them to choose any difficulty at level 1 on subsequent characters.
Anyway, the way it would work is that when you start a game, you could choose between the Normal/Nightmare/Hell difficulties at any level without having to kill Diablo on the previous difficulty to unlock the next. The difficulty level would affect the complexity of the elite monsters encountered. Normal mode would have single-affix elites, Nightmare would have double-affix elites, and Hell would have 3-4 affix elites. Levels would no longer be directly tied to the difficulty selected. The monsters would scale down to your current level (or maybe +1 or +2 if you picked Nightmare or Hell respectively) up to a maximum. So if you started a Normal game, the monsters would scale to your level up until about level 20 or 25, and then they would stop scaling and stay at that level. Nightmare monsters would scale up to 45 or so. Hell monsters would scale up to 60. Monster Power would still work as it currently does. Inferno mode would still be exclusive to max level players and not be changed at all.
You'd still have to play through the game multiple times to reach max level, but your playthroughs could all potentially be interesting, which is important to making it feel less like a soulless grind. It also more elegantly allows for expansions to increase the max level, and allows you to insert chapters for expansions.
Anyway, just an idea I had that I needed to write down somewhere.
Edit: Yeah, higher difficulties would also have increase MF%/GF%/XP% or whatever incentives are necessary beyond just having a more interesting play experience.