I do play with Dense and Expert monsters.
1. Monsters last all game. You aren't going to kill them ALL, and when you think you have, you will find level 20 slags walking around in groups.
2. AI will kill a lot of monsters. Then you will see an increase in aggression because the AI will have higher level units. Then they will usually aim the units at you, which gives you MORE levels from killing those units.
In recent games, I have been "pinned" in my starting city building crap troops. A, Shoot monster in my land with Strategic Spell B, hit the monster with a sacrificial Crap Stack, C, hit the monster with my actual sovereign stack. That takes care of those early game 140 power Darkling Shamans, and helps my units level to get out more pioneers.
Perhaps the monster difficulty can be changed in XML to give different categories of monsters different difficulty level. (beasts -1, bandits -2, dragons +4, twistid +3...)
However I would suggest less monsters = higher level, more monsters = lower level.