Is this another inverse difficulty curve, or is the deck just stacked too high against the starting player? Smart play doesn't help when the RNG is wearing you down with fails. Throwing a bunch of lvl 10's into the parties doesn't sufficiently level the playing field, so you get punished for not grinding on those shadows and wolves before the plot carries you away. This hobbles play and plot to a discouraging crawl when it should be hooking the player with early momentum. Try adding the challenge after a taste of power.
I have mixed feelings about Diane; she's a more dynamic and credible heroine than usually found in these games, but her actions also seize away player choice just to demonstrate what a strong female character she is.
EDIT: Btw, don't you think snatching away the celebratory h-scene halfway through is kind of a dickish move?