I've actually seen this option in other games before. I don't remember right off hand, but I think Dante's Inferno, God of War, maybe the Bioshock games I'm not sure. Nifty thing about the Bioshock games is you can change the difficulty at any time, and then just turn it back up once you get past the hard part.
Changing difficulty at any time of course is a standard in many titles, it's the only reason i had the patience to finish Last of Us...those cabbage heads were just too much for me.
What we're talking about is dynamic difficulty that changes automatically without letting you know, sort of like opponent leveling but going both ways.