Multilayer goes a /lot/ faster then single player if everyone splits up, amking for faster progression.
On the current scaling, I have to agree the reasoning is a little flawed. 2 players fighting 2 separate monsters in a chuck results in each of those monsters being threatening for 2X the amount of time. Yes, it take the same number of shots (well, not even that's true, they often take 1 extra) to kill the same number of mobs, but the time is usually more then double, the threat goes up more. It gets worse as you deal with more people, as you find yourself each trying to fight 3 seperate monsters with 3X the health which in the case of mobs like bats, is quite likely to result in a melee hit you wouldn't otherwise.
It is notably easier to do a lot of content solo then together.
I do like the gist of that idea by Martyn. If only because it would have other applications to things other then multiplayer scaling. I think darkspore did this well. If you were in multiplayer you got a few new types of mobs (hoolder type mobs that requires a team mate to rescue you), more 'mini-boss' type mobs with more bonuses, a few more mobs in general and more but not liner health if I recall right.
Alterntivily, reducing the hp scaling a little would work wonders, to take account for the less then perfect efficency of humans and the increased danger of certain mobs that get a lot more deadly 1 on 1 when scaled.