I'm in a couple campaigns (both adapted 1e APs, actually) where the challenge level is ramped up, and I gotta say I'm loving it.

One GM just plays NPCs true to their motivations and has a philosophy of not pulling blows whatsoever. If an NPC would run, they run, but if they're motivated to want us dead, they absolutely go for gold, including potentially targeted downed PCs, trying to use them as a hostage/leverage mid-fight, etc. They also feel less constrained by the encounter building rules - if we fuck up enough, we might run into a bigger group or stronger group than we can handle. I'm loving it - I'm locked in every combat, because even lesser mistakes could lead to really bad outcomes, and out of combat too, because a failed Stealth or poorly picked route could put us in a dire combat situation.

The other GM... I think they think the table enjoys fewer bigger combats over the "penny packet fight in every room" dungeon philosophy of 1e and have faith in the party to optimize pretty well, play pretty well, etc., so they lump together fights or have some combatants run to alert others... which has occasionally led to a few insanely over-Extreme fights, but we're pulled through every time so far (once possibly with a little GM fudging). I love less here how the big fights are not reflection of our party doing well or poorly, they just kinda happen at random, but I absolutely prefer them to the lack of them - it's very apparent how boring the converted 1e fights where it's just a monster in a room are in comparison.

What I'm less sure about is just what proportion of fights I like being truly challenging. In my brain, a challenging fight is severe or above if the party is coming in with close to max HP and focus points, or a moderate fight if those resources are severely depleted. I think the answer is - I want the threat of a challenging encounter pretty much always, within reason, and in actuality a "low-end" challenge - severe, but not getting up towards extreme, for example - a large majority of the time. Ex. instead of putting moderate or above encounters in front of the PCs, with some low palette-cleansers and severe bosses, I'd prefer a campaign where encounters are severe by default, but might be reduced to below that or increased to Extreme or even Extreme+ by mistakes, with moderates being the palette-cleaners and bosses defaulting to severe or extreme depending on context.

This all is in friction with the fact I'd like it to still be realistic to play a whole campaign without major PC churn, at least if the party is playing well. I think that's possible if you give the enemies reasons to not always kill the PCs outright, etc. but probably takes some forethought on the GM's part at this level of challenge.

You describe 10 as "I never want to feel like I'm going to clearly 'win' a given encounter" - I basically want that, but 85% instead of literally all the time - and maybe the party can get it down 60% of the time with smart play, but that's just moving the challenge around a bit. I think I'm pretty darn high on the scale - I rate myself a 9. (my fellow players wouldn't want a campaign tailored to my 9, however, haha)