Better yet would be to manually increase difficulty in your savegames from month to month, this would give some of the desired effect. Would like to see that as an option. Try it out, I had lots of fun playing at 2-digit difficulty levels.
But then again I am just insane as Solarius already stated... 
*avoids eye contact* +1! I like this idea. As an option of course. (Sounds trivial to code, we'd just have to design it somehow; for example increase by 1 every 3 months.)
TFTD had a UFO class above battleship, didn't it? Maybe that would be a good place to start.
I don't think there was such a ship (except for T'leth, haha), but I can't see any problems with making such a shipo and adding it to the game. However, what exactly would it do? What missions would this super-sized ship be in? Would it share missions with the Battleship? (In the latter case, some coding is required, since the Battleship is hard-coded to be used in base assaults and country takeovers.)
Like you said there make the ruleset for winning so that you have to have a sectoid, floater, Muton AND Ethereal commander to gain access to the final mission. That would force you to go clean out an etheral base and capture an etheral commander.
While Ethereals are nasty, I don't think it would make the game that much harder. Unless we're speaking of those "speedrun" campaigns, where the player aims to land in Cydonia in March.
As I see it the problem with the endgame isn't the hit point count of units or the fact that humans have alien tech; it's that they have better alien tech. One example is the plasma beam outclassing all but one of the alien ship weapons.
It makes very little sense, strips the interception game of risk lowering difficulty overall as ships are rarely out of action and makes every other weapon obsolete - even the higher teir ones.
So true.
However, using the
Plasma Beam Mod or something similar makes the choice much less obvious, sionce you're constantly out of Elerium to power the plasma cannons (except the late game, but even then it's still a factor in your economy).
Why are ethereals mind controllable at all? They have a way bigger brain than humans and use their powers for everything from moving to controlling armies but a human with a months crash course in psionics can just take over their mind? bumping their psy resistance to impossible to beat levels would make the game far harder once you start seeing them every other mission.
Sure, you can do it. I don't think they should be perfectly immune, (for gameplay reasons, though I can come up with some explanations - for example their bodies rely on psionics so much they are easily disrupted by psionics), but they do seem too weak.
BTW, Dioxine decreased soldiers' Psi Strength in his Piratez mod to diminish the Psionics... It changed very little though, the best psi-ops still own their enemies.
That leaves the blaster bomb. I think the aliens bring too many bombs with them and the cost for making your own is far too low. I'm not convinced there is an issue with it as an occasional weapon.
I think it would be much better if the aliens actually
used these bombs. Compared to the original game, aliens are very reluctant to fire Blaster Launchers. I find myself using far cheekier tactics in Battleship missions than I used to, since I don't feel threatened much...
However when making these changes I've found the alien invasion scales a little fast for my liking compared to the players abilities and I can't find a balance I enjoy.
What does change things without leaving you in trouble is stripping the plama beam from its seat as the holy grail and increasing the utility of the other ship weapons. I'll attach an example - it's far from perfect but it gives you the idea, small changes can affect the game a lot.
Can you please summarize the changes, for example in a simple comparison table? I'm a lazy person.
