I actually started the game on the hardest difficulty, but a couple hours into it I realized that I made a mistake, and had to restart the whole experience to change it any further. I played on the second-hardest difficulty then through most of the game. I turned the difficulty down to easy for a few of the end-game things where level played a large role.
Told ya ^_^ to restart early.I feel ya, I made the same mistake. It's damn near impossible and kind of cheapens the game but damn did it feel refreshing to be able to take two or three hits by a boss you before you got downed, that second chance made all the difference. I think they need to redesign the health system in the hardest difficulty, replace it all with stackable vials or something even if it was just three max, it'd still be hard as fuck, a ton harder than dark souls but it would impact the games combat in a less negative way and be less of an utter head fuck. They went way overboard on that.
With the amount of attacks that can easily one-shot you on the hardest difficulty, a health system like you proposed could be a good solution. Ideally the defense stat would be modified as well, as I can't think of a use it would have with that setup. I'm still not keen on comparing the game's difficulty to Dark Souls, though. I suppose there are a lot of factors that determine how hard something is. If it's based on the number of deaths, then something like Super Meat Boy could be called the hardest game. God of War has difficult combat, but punishment is what defined the difficulty in Dark Souls.
Disclaimer: Dark Souls is one of my favorite games