Part of my problem is the granularity. Going from peasant to guard doubles the damage. I think I'd like some more options in the low range to create monsters that aren't ridiculous threats to 1st level PCs. Another part is just that each attack has such a huge impact -- I had some cultist goons that did 8 damage each (which is basically the minimum) which is like 2 or 3 hits on a first level PC. These big numbers make the minor variations, like getting 2 points of healing from a Paladin's lay on hands, seem less impactful. It also makes the GM's "should I do damage or a softer move?" decision very weighty, to the extent that I was feeling uncomfortable in my session last night. Also, with the possibility of doing one-shot-kills with guard-killing-solos there's no room for error on the PCs part: if they erroneously think they can take a shot from this thing they'll find out they're wrong when they're rolling Last Breath.
First level characters shouldn't be facing "guard killing" stuff for the most part. (This just points out that we need to change it from "guard killing" cause that's just not right.) We need to make this clear: choosing a higher "can kill" option is a BIG deal. It's like making a monster "higher level" in the sense that it's definitively more dangerous.
2-3 hits was what we were looking for! Which means we need to communicate what you're making more clearly, but that's what a monster should do. "Can kill peasants in a party" was supposed to mean something like "a party of these can fight against a party of adventurers and not be foolish."
We've actually got spreadsheets galore on this to make sure that we're saying what we meant to with the stats. Our goal was that a small group peasant killer would be a danger in a one-on-one fight with most PCs. PC HP and Armor at first level ranges from 13 (1 Armor) to 23 (3 Armor). The small group peasant killer (8 damage) can kill low HP one in two hits, barely. The tough one can take 4 hits and still be standing. The in-betweens can take 2 hits.
I think maybe the problem is that "can kill peasants in a small group" doesn't match up to "can go toe-to-toe with a player character." In retrospect that's super obvious! But the math there was what we intended. The squishy PC can take a hit, but then they gotta think twice. The tough PC can take a hit and not flinch.
Then you get to monsters that can kill a peasant on their own. The idea was that meant "dangerous to a whole party of low level characters." (Again, when written like that I can see that we used the completely wrong term. Killing a peasant one-on-one is something a tough goblin can do!) That follows through to the numbers: anybody but the toughest of the tough can only take one hit (but no one dies in one hit either).
Why so few hits? Because combats are quick. Monsters are paper tigers. A fight is a quick bloody thing, not a slog. Your monsters won't be around for long, but while they are here they'll be painful. After a fight the players will need to heal most definitely. They may even need to make camp. Things snowball: a fight isn't just an event that we forget about, it ripples out through everything. There are no throw-away fights.
The paladin's healing not being very useful is certainly useful information though. We've had a hell of a time dealing with the healing niches and we'll keep working on it.