Yes, that's an april fool's joke - the quest can only be gotten on april 1st, but you can continue to craft/use potions after getting the quest to change your appearance. It will never fade away, but you can reset it back at the surgery lab.
The difficulty modes just change things like damage or add an eat cooldown (some modes also reduce carrying capacity and skill points per level). Nothing major, but as you saw it can make some areas that were easy a challenge, or challenging areas easy. You can switch it around as you want at any point.