I remember it having a nice subtle balance - you couldn't afford to just let terror missions go unmolested because you would quickly lose funding. On the other hand, you couldn't just grind soldiers out because you needed them to progress with skills, etc. for the endgame... although there was a sort of plateu around when you got armor and psi-ops where things got boring between, say the 70% and 95% where you were just waiting to capture that one thing you missed in the earlier missions... from what I remember, that was the worst thing; There were like 2 or 3 things you needed for your tech tree that only appeared in early missions and they were really difficult to get after that.
Once you realized "Hey, we're totally outgunned...we just need to flood the aliens until we get better gear", things changed. Missions became more about resource management: what is the bare minimum I can field to wipe these guys, what can I build and manufacture that has the highest profit margin, etc.?
Terror missions, for example, early on devolved into "Set fire to everything, because we need the light, and shoot the civilians, because they could be used to feed the Chrysalids and make more Chrysalids."
The enemies in the game stayed largely the same difficulty, but your equipment got better and better and tactics switched as you were able to field more expensive units--and unless you ran a really tight resource game, you treated those expensive units much differently.
The thing that made the game feel unique was exactly that: the reverse-difficulty. If you started kicking ass, and then things got harder, it'd be annoying--instead, you had some early success, discovered just how outclassed you were, and after a few restarts learned how to fight a technologically-superior enemy until you had achieved force parity.