Would it be beneficial to have a difficulty system that pertains to each skill rather than the game as a whole?

You could set each skill to a certain difficulty level meaning that some skills would be harder to level up this could potentially solve balance issues. You could for instance have Smithing at Master and pickpocket at Adept. Then you could have a seperate difiiculty for combat.

Just an idea. Any thoughts or ideas of your own.

I think the difficulty setting at the moment is too generalised.

Generalized? I thought the difficulty only affected combat.
For me, I'd like it if buying skills and reading skillbooks only increased by a fixed amount rather than always a full level.

You may be right, i thought that it affected leveling also?

A full level is a fixed amount???

I am pretty sure the leveling affects the amount of damage you do, take, how much loot you get, the regularity of such drops and the amount of foes you're likely to encounter randomly. Casting Summon Frost Atronauch x10 on Novice or Master gives you the same result levelling wise, but the difficulty of the battle that summoned creature is involed in, should factor in somehow.