Oh.. yakno I never thought about that ahahha! except! that applies PVP wise too doesn't it? So it's only a hackable workaraound. Except... I can see this working... hmmmmmmm. Doesn't that then add difficulties like.. spells effecting party etc? And also everyone will be immune to sneak attack?
If you are PVPing in some areas then why would you wish a disadvantage to NPC assossiates? Hardcore seems to be the best for PVP as it evens the playing ground.
Immunity to critical hits would not decrease the potency of some spells like an easier setting would, but these would be things like reducing domination to daze, and shortening duration of some mind-affecting effects.
Sneak attack would be an immunity granted by immunity to criticals. But, like critical hits sneak attack does provide a significant damage boost that can be used to exceed damage reduction (when the normal blow would not be able to).
I guess the main question to ask is- what are your intentions of giving low level characters an easier difficulty? If you want easier encounters you can either set easier encounters for the low level areas or use the scripting command SetEncounterDifficulty() to allow you to toughen or ease the threat from area to area.