I’m very skeptical that the DDA can possibly work so well at to go unnoticed, save scumming issues aside.
First, because to make it work “properly” you can’t just be basing the player’s performance on the amount of damage received. Fixing it now is obviously not a matter of adjusting parameters (e.g. amount of damage received), but of adding many new ones (e.g. How many apples did that player who took 0 damage save on that last scavenging trip? How often does he/she go on apple gathering trips anyway? Is the player taking little damage because of reliance on (expensive) explosives, so maybe his/her resources are now depleted? Etc) And for the work that requires, just do the real Panda evolution 
(and, come to think of it, how hard can it be? Just instead of looking at average damage done to the player look at the type of damage done by the player to the Pandas, and adjust their armor/hps accordingly to counter excessive use of explosives, AP, or high damage weapons)
Second, because even when scaling works properly, or more reasonably, ie it is less “spiky”, it still messes up difficulty expectations.
For example, in FXcom opposing forces evolve with time/mission count. At least in the first FXcom and expansion, it doesn’t matter what you research. There are a couple of event triggers (as with sectoid commanders and etherials), but you could still be facing mutons with a 1st tier AR (which did happen to me a few times). It’s harsh, but fair - and predictable.
By contrast, making difficulty depend on some behind the curtains formula is, by definition, unpredictable.
Summing up: Just make DDA optional.
And I’m speaking as someone who would play with this option on, because I don’t save scum and I enjoy the extra challenge (at this point I’m pretty good at the game, but I don’t feel like playing at legendary, especially as I play with some self imposed restrictions, so hero with DDA is about right for me).
Unfortunately, I don’t think that would work. Save scumming is mostly used to optimize the player’s turn. Once Panda’s turn starts what most players want is to reload the game as soon as they see things are going to go sour. Actually, there are many requests to enable “esc” to work during the enemies turn precisely for that.