Challenge 16, while not impossible, is vastly unfair. Starting with life so low you could be killed with one card, and starting with a low Sanity, and you lose if you go insane, with no upside is not fun. Even thought the taint does not increase (at least not anymore) it is still too hard. I would say 20 sanity, 30 life, lose if go insane, with the oppoent as he is would be a "fair" challenge, or if not going to increase your life/sanity, you should have at least 7 Elder Power, if not 10 (remember the guns ignore Elder, so a Raid & Blast 'em will still kill you in two turns.
Other than Challenge 16, has been great fun playing, I have been playing since you first posted the game.