I agree on the challenging part, but I think there's an "increased difficulty" official mod. I haven't tried it.
As for city development, the cities are relatively small because they effectively simulate every single citizen. No cheating. This is why even a high-rise building will have just 10 inhabitants. I think it's a more honest approach than artificially multiplying everything by 100 as Sim City was doing.
I agree with overqualifications, that area needs tweaking. I always had problems even with industrial zones as there weren't enough people willing to work there.