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Lol at that "challenge". Second Seals are still allowed, Grinding is still allowed, Promoting before 20 is still allowed and having less than a full party is still allowed. what a joke.
Second Seals aren't that Gamebreaking unless Olivia. Grinding? Lunatic Mode without DLC/Wireless Features. Good luck grinding in that. (Unless Olivia.) Early Promotion isn't that useful. Undermanning yes, does need to be cut.
Yes that challenge allows Queen of Lunatic (999 Turns on Ch 11, use seconds on Olivia, Pair Olivia Chrom for super Lucina (lolololol Sumia, highest stats lololololololol) pair MU/Lucina to mirror carry that stat rush out to another character) if you go that route, but other than that, you can't grind on Lunatic(+) without the Outrealms. (DLC considered "Wireless Feature")