I do not really like the fact, that you want to limit multiplayer, instead of giving players choices to ban some artefacts or spells etc... I am looking forward mainly to multiplayer, and I was expecting mods to take care of balance, but I do not want to play dumbed down version of elemental. Just because of the reason you wrote. If you can not do it properly, leave it to players, but do not screw it please.
And for +3 sword, what is the difference, if AI get it and own me, instead of player? For example, this thing, can be solved really easily, by adding rarity to items, and then being able to set what rarity of items appear in which godie hut, or better, being able to exclude every single item from it.
Only problem can be some really game changing powerfull spells, which should be banable, and we are set.
Pacing is always problem for TBS, but if people go to play MP, they expect that...
I am sure, there is sooner or later going to be mods aimed on balance. And to achieve it, we need options, and not forcing players to one scenario no matter what.