I wouldn't have a problem with challenge mode if Hard Mode was actually hard though.
Like Warpriest. If his HM fight was in the normal mode, that would be completely fine. It's not all that challenging.
And if you balance towards PUGs then...well..that's bad balancing. It's ok to spend time learning and doing a boss. This fascination people have with clearing a raid the first day it's out is weird to me. In a game like WoW, you spend time learning the fights and executing on them, and it usually takes weeks to be able to do a hard mode version of the raid. Premade groups will sooner or later get it, much faster than a PUG, simply because the people working together know how to work together. Hard mode should be challenging, so adding a 'Challenge mode' to an already easy hard mode ain't nothing.