Here's how I see it. The first sentence of the Defend Move reads:
When you stand in defense of a person, item, or location under attack, roll+CON.
The italics are my emphasis. If I were GM, I wouldn't let a player defend someone or something unless or until that thing came under attack or it was blatantly obvious that person or thing was going to be under attack in very short order.
GM: The Cave Troll hefts his club high into the air, ready to bring it crashing down onto the Halfling Thief. What do you do?
Fighter: I leap in front of the brute, raising my shield to deflect the blow!
GM: So you're Defending the Thief, then? OK. Roll+CON.
I would also only allow the character to continue the Defend Move if they don't take any offensive action. The third sentence of Defend starts:
So long as you stand in defense, when you or the thing you defend is attacked...
Again, the italic emphasis is mine. In my opinion, as soon as the character makes an offensive move (small "m" here), they'll lose any unspent hold they have from the Defend Move. If they want to protect someone or something again, they'll have to narrate the action, giving a fictional context to the Move. They'll also have to roll+CON again. Even if they're defending the same thing.
Fighter: [Rolls] That's an 11, so I get 3 hold. The Troll's club smashes into my shield, but I turn it lessening the impact. At the same time I bring my sword up and drive it into the shoulder gap it's outstretched arm creates.
GM: So that's half damage and damage equal to your level?
Fighter: Uhn, wait. That's redirect the attack to me, and half damage. So the hit I landed on the Troll is only cosmetic damage I guess. I have 1 hold left.
GM: The Troll bellows are reels backwards a few steps. He looks at the blood trickling down his arm and roars at you. Spittle sizzles as it strikes your dented shield. What do you do?
Fighter: I rush forward to finish the brute and...
GM: Hold on. So you're abandoning your defensive position? You're going offensive now, and you'll lose that 1 hold if you do. Is that OK?
said, the Defend Move is pretty useless if the person or thing you're defending doesn't
get attacked. I mean, it'd be a total dick move for the GM to have the monsters ignore a defending character just to make the player waste their holds, but if nothing comes after the target of the Defend Move, that's what will happen. As soon as the character doesn't meet the "stand in defense" requirement of the move, the holds disappear.
And yes, high level characters have the potential to do more damage with the "damage equal to your level" option of the Defend Move than with their base damage. A 7th level Fighter will always deal 7 damage instead of rolling a d10. But a 10+ on Hack & Slash allows you to deal you damage and
avoid taking damage. Contrast that with the 10+ on Defend. If you only take the "deal level damage" option, either you or the thing you were defending gets hit for the monster's full damage. That could possibly kill or destroy the thing you were attempting to defend in the first place. If you take the "redirect to yourself" and "deal level damage" option, then you're taking the full brunt of the monster's attack with no way to avoid it. If you spend all 3 hold at once to take the "redirect", "half damage" and "deal level damage" then you're still taking half damage and you've used up all your hold, forcing you to roll+CON again for your next move if you want to continue to defend.
So the best outcome of Hack & Slash is damage to the monster and none to you. The best outcome for Defend is damage to the monster and half it's damage to you. But the thing you were defending doesn't take any damage at all, which was the whole point of defending it in the first place.