[2020] Stone->Iron->Steel is unbalanced.

Yup, pretty much.

This only "affects" people who for reasons of their own harvest one block and one block only.

I knew where it was heading. =P

There are multiple approaches to get there so the only chance to scale this is statistically, taking all means into account. It's up to the players how strongly they push harvesting.

If you create a mod where it's game over after you harvest one block then the vanilla balancing would suck for that.

Sexosaurus is very powerful indeed.

Everything is a lot easier for people who have played the bits off of this game but we can't make a game for people with 500+ hours in the game.

If it was just up to me, game difficulty would have more varied effects beyond enemies becoming more HP spongy.

Alas, a) it's not just up to me and b) doing something like that should happen after release because that would be a serious rebalancing effort.