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Also remember the slider is for stupid people - console gamer people - you don't want the slider. Leave the slider in the middle and use console commands. Or fine, mods. Sigh.
Because the slider changes both percentages equally from 6% to 600%... you put it all the way left, you do 6x damage, they do 1/6th, push it all the way right, it's the opposite, you do 1/6th, they to 6x. Neither of those is fun. Most people who don't know any better but want a challenge, settle on about 2/3rds to the right, which is 1/2 damage dealt by you but double dealt by opponents. When you don't know there are options, it's a good compromise.
If the 250% changes the variables so that both do 2.5x, that could be fun, I find 4x / 4x is fun too but a bit "jumpy" you tend to want to strafe/dodge everything even imp spells, and going into Oblivion portals is a long process and involves lots of recovery potions (all 3), and gets much harder as you level up.
But leave the slider alone, it creates, as you say, sponges.
There are plenty of damage modifier mods, that are worthy of a mod and not just setting a couple variables because they're a bit more elaborate, where all damages are tailored, 12 different categories. Wearing metal armor and get hit by electricity spell or charged weapon, 20x damage, baby! But leather, 0.25x However leather and blunt? bad idea 16x! Oof! And so forth. Depends on how far you want to "fall down the rabbit hole" on these things.
So too difficult and you can't progress the story. Too easy and most of the game's depth disappears. So you need to find the sweet spot for your character+level.
Just experiment until it feels right for you. For your current character at its current level while being played by you. No one else can really answer this for you.