Co-Op offers the choice to play with others of your choosing. It is not a random match-making cesspool. You host your version of "the world" and invite family and friends of your choosing when you choose to do so. If you do not like the experience with them, you block/ignore them and never invite them back. If they truly mess things up; there would be a fuction to revert back to "the world" as it previously was before the invite.
Balancing issues would be a non-issue. Even if you can invite at a max of 4 others and you take down dragons 4x as fast, that is how you agreed to experience these encounters when you brought heavier arsenal. TES games always allowed the freedom to either put the game on hardmode or make an over powered bad-[censored]. Balancing content was not a huge concern since you had full control...and remember, you would be hosting "your version" of the world so if you want the epic/hardcoe experience there's a mod for that. Your guests would be effected by those mods while co-existing in your hosted world.
Again...if something bad happens (i.e. host has malicious mod that strips and steals all guests armor) then even the guests would be able to leave the game and have the option of reverting back to their character's configuration before their co-op experience...and they'll likely never return to that host's world. There can be a user friendly voting system that both hosts and guests score one another so that you can feel a bit more confident if you do want to invite a stranger (not everyone has RL friends or family that play TES games but they want to partake of such a social experience).
I am not a programmer so I cannot begin to work out the coding and logistics that would go into building and maintaining such a system (what a wonderful thing to one day learn though

TESO is a given: come success or fail there is no turning back. But seeing as Bethesda (alright...alright...shuddup I know...Zenimax [who is a division Bethesda]) is interesed in connecting players......than why is this not being considered. Why is the same people who are excited about TESO also some of the same who are rejecting the idea of a Co-Op [OPTION] of Skyrim.
TL;DR: Please don't respond. I already have an indent in my face from all the palms I have smacked into it.