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Right now Im at the finals of the holy palace tournament. I am currently lvl 104 with dopple weapons and raimbow scales equiped, and I have to say that the enemies are just too easy. Every battle is quick and relatively no dmg is inflicted upon me. Does the game eventually get harder as the game progresses? No spoilers plz.

imho yes, the tournament is a painless process and rather fun in my opinion as they tease you, you have a long way to go.

Taihaku's pretty hard cause he's a cheap bastard. The Doppel weapons won't help you there. You'll need to level. Other than that yes. Thats why I stopped using the Doppel weapons (except DG-0) cause they made the game too easy and once you get X-form they really look odd against Haseo new coloring.

For Taihaku I was at LV 120 to 125 still used all 3 doppleganger weapons had all 3 weapon types of haseo at skill LV 30.

I used the LV 21 skills or the scythe or twin blade and Taihaku died instantly 5 seconds after the battle started I had each hit cause him to lose over 1000 HP.

Project.hack has never been the type of game to level up in. I believe it shows good structure in an RPG if you can beat the fights in storyline, albeit challenging, if you have fought your way there without taking extra time. This is the reason I abhor Final Fantasy. Running around in the same place for hours just so I can advance the story does not, a fun game make IMHO. .hack is a much more challenging and enjoyable game if you don't level grind.