I'm not sure I'm following your second point on extended combat? NPCs are supposed to have less Body to go along with decreased PC weapon damage, but PCs are looking at having more Body and armor, which would seem to suggest that NPC damage should either stay about the same or go up slightly to compensate; my understanding of the intent behind the changes was that fights would take about the same amount of time overall. It may be due to the fact that I'm running on two hours of sleep and work wore me out on top of that, but I'm not really following you on this one... I'll come back to it tomorrow if you don't feel like dumbing it down and walking me through it.
I think it's probably a lesser point compared to the high/low level concern, but for what it's worth my thoughts are thus (and backed up somewhat, but not extensively, via playtest, as well as time as a head of plot and monster designer):
1. There is a practical floor for NPC body. That is to say, yes it should be going down across the board, but there's only so far down it can go and still deliver meaningful combat. I don't think it will end up being proportional to the loss of damage on the PC side.
2. The game tends to play best when combat is largely symmetrical. In other words, when the skills and numbers look roughly the same on both sides of a given battle it gives a nice organic 'baseline' feel that an encounter designer can build upon to make a given combat more interesting or engaging. When damage and body are too unbalanced that becomes the thing, and it's hard to make the combat design about anything other than overcoming that deficit. That can be fun sometimes, but gets old fast.
3. My playtest experience so far has been tilted towards longer fights. I don't know the exact cause (lower damage is some but not all of it), but even the smaller minions seem to stay alive longer and drop more hits on the players.
4. One of the major sources of healing is about to vanish completely. Skill healing is increasing, but is that enough to compensate for the loss of magic item healing, increased PC body, *and* increased damage over the course of a game? This question isn't really answerable right now, but no encounter designer wants to end up on the wrong side of it.
All this combined says to me that lower average NPC damage numbers should be more common once we reach a stable equilibrium, and thus boosting the value of a flat rate weakness over a percentage reduction.
Yeah, that change feels significantly more powerful than Weakness is now to high-level players, which is why I feel it should be moved up to level 4 (or maybe 5?) if that change is going to be seriously considered. A.Mungo can probably offer more insight to why he thinks it should stay at 3 if it halves all damage, but my personal opinion is it should be level 4 or 5, so by the time a Scholar gets it it's not too weak to be worth memorizing but will also continue to be useful going forward.
My concern is more for the loss of utility to low level characters than for the gain to high. Minus 5 damage can mean the world to a low level character, whereas half may only be 2 or 3 points instead. Moving it up in level just exacerbates that, because it's now less useful *and* less available.