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I agree. Multiple difficulty modes would be fantastic. I enjoy the single player campaign and wish it could be a challenge.

Here's what I would do for the hard mode:
All trainers have higher level Pokemon and have better AI. Some trainers have more Pokemon.
Gym leaders, Elite 4, and the champion have much better AI, have Pokemon that level up with you with a level that is based on your highest level Pokemon (this prevents you from playing with only one Pokemon), have Pokemon with perfect IVs and are fully EV trained, and have additional Pokemon with better move sets.