What makes you think the game doesn't have any challenging moments with the first 2 difficulties? Ok, it was a Squenix goof up with the first 2 difficulties having the same. You want a real challenge, you say, though, ok...
So you get to this portion of the game at Chapter 5 in which you have to protect Anne. Would you try and beat the bosses without the bomb and just grinding normally through. You can also try beating the entire game without getting any of your characters killed. Can you get 99 Empyrease(sp?)?