I would agree to this (or something similar) if such a formula applied when:
- The character was playing the challenge at a character level over the challenge's level.
- The challenge was being played on the highest level available to that challenge.
Otherwise, you would end up with 2 problems:
- A very high leveled character (level 20+) would have a fairly small change in the payout between level 4 to 15 challenge, but the rate of killing and threat of the monsters is fairly drastic between that 11 level range.
- A very low leveled character (level 1) could rake in absurd ingredient amounts on very high level challenges that have low monster interactions (such as Buying Time). Being able to earn 1500 to 4500 Epic Mephit Wings in 5 minutes may be a bit much.