I would say that you can still have a game that ends up being difficult and still appeal to a broader market then just the hardcore/oldschool gamer...although there is a market for hardcore games, don't think you have to appease a broader market of casual gamers.
I'm not sure what type of game you are making, but one of the more important things is to make sure that players have the basics down properly before throwing the massive difficulty at them, this way, as Wastrel mentioned, it would be viewed as a player skill issue, not a game issue.
So perhaps add a few more levels at the beginning to gradually raise the difficulty and make sure the players get the basics down properly.... also if you introduce more game mechanics later on, you can ease up on the difficulty for a few levels to make sure the player has the new mechanic down, and also makes it feel like they are making some progress. After the player has had some practice, re-introduce the brutal difficulty.
This gives the games 'peaks and valleys' and not just a constant upward trend in difficulty. Which may be the way to go if trying to appeal to broader audience without compromising how difficult the game would be to ultimately beat...
Extra credits had a good episode on pacing, which applies to many things: Pacing