Cipher is not mandatory. I beat the game on hard and now playing on POTD I don't even notice much of a spike in difficulty. (Probably due to game knowledge. Shadows and what not sucked on hard so I knew what to expect on POTD.) Rolling with my PC monk, a merc wizard, Eder, Aloth, Durance, and Kana.
I like the party banter, so I play under my own weird rule of one hired adventurer.