@Fulgrate: Players don't have as much endurance or reflex capabilities of BOTS unless they are born with above normal level of abilities. That's why nearly 80% of gamers cannot win against a strongly defined AI because they lack the skills to do so. Only the few will have the ability to fight equally to an AI that does not cheat.
Stupid Cheating AI -> Smart Non-Cheating AI... The scale is there, but there's a reason to use the stupid cheating AI. The stupid cheating AI is beatable, while a smart non-cheating AI is an extreme challenge for gamers. Since only the top quality of gamers could ever defeat the AI, that's the whole point why AIs are not further develop to be smarter. They don't have to be smarter because the gamers don't require the AI to be smarter. AIs only need to be strong enough to be a challenge to the players, and since a stupid non-cheating AI is good enough for the casual players, and a stupid cheating AI is good enough for the amatures. Hard core players are the ones that need to have a smart AI, but there will be none. That's the reason why hard core becomes players vs players game because there's no AI strong enough to eliminate the need for PVP.

@sunandshadow: chores are not mandatory like the three elements of life. Society tries to create other mandatory elements like chores, bathing, etc. However, grind is what makes people happy.

I agree that putting 'treasure rooms' dissociates the reward from the actual combat. The drawback to this is that it makes combat less rewarding, more of an obstacle, and players may be tempted to run away more, leading to under-leveled characters. That means before long, players will be having a hard time fighting monsters, and their easiest solution will be to grind up a few levels. Would there be a way to avoid this loophole?

Treasure makes up 80% of experience in Original Dungeons and Dragons. Only in later edition where the experience for combat are inflated in order to remove the experience from obtaining treasures. For all of loot, each gold piece in value is worth 1 experience point. Taking the treasure does not make the players underleveled since treasure equipments increase the character stats indirectly.

Playing any game is grinding for happiness because the default emotion is mild depression. Everyone will move towards the center and neutral point in emotion. This default emotional position is considered negative!

Grind defines the genre of the game. Without a grind is without a genre. Love the grind because grind is content!

Progress Quest has too much grind!

Not Pro-Grind!
Remember that I've already said, grind is content, and it makes the genre of the game. Grind is a relative term to say that the player's skill level is beyond the game's capacity to challenge the player.

Grind is a necessity just like life has the three elements: eat, sleep, excrete!

Reduction of grinding turns me off. The moment I started using game shark codes, I've stop playing games for half a decade. It's when I found out that grinding is a necessity like the three issus of life, that when I realise that grind is require to enjoy the games.

I would like to take this opportunity to enlarge the question to this:
What alternatives to grinding could increase difficulty/challenge in a jRPG that couldn't be overcome by fighting more battles to become stronger?

Bringing back attrition could work. jRPG usually have simple combat systems that don't allow for thoughtful gameplay and get their challenge by randomness or throwing bigger numbers at you. Grinding overcomes bigger numbers so all that is left is randomness and that's hard to overcome. Attrition seems like the logical choice, but that can be hard to balance.

Attrition in games where the player is allowed to have 99 potions, 99 high potions and so on can quickly get boring. It's only a matter of filling your potion slots ahead of time and spend a tremendous amount of time in the menus patching up everyone. I think the time spent by players in the menus should be kept to a minimum if a game of that nature is meant to be fun. Since you brought it up, what kind of alternate solutions do you have in mind for attritions?

That's the reason why I said it was hard to balance. You can easily get situations where you need to conserve every last bit of resource for the boss fight or ones where you can do whatever because you have more than enough resources. The biggest hurdle is the variable number of encounters between rests. There needs to be a concept that can limit your ability to progress if you take poor choices, but allow you to progress almost infinitely if you play perfectly.

One way could be by having a volatile and a hard to regenerate durability stat. An example is Bloodline Champions. If your current HP drops below 20% of your current Max HP, your current Max HP drops to your current HP + 20%. In other words, if you have 100 HP and take 25 damage, your new max HP is 95. Healing spells are easy to come by, but will only heal you up to 95. To heal back to 100 requires a lot of effort. It has some drawbacks because it doesn't allow you to come back to full strength after suffering a beating, so the most damage you can deal to the player at once is the maximum the player can heal before losing max HP. If the player takes more damage, he will eventually die in 1 hit and be unable to progress.

Another method would be by taking away random encounters. If the number of encounters to progress is fixed, it becomes easier to balance. D&D 4e used that with their healing surges concept. The game was designed to allow you to fight around 4 encounters before doing a full rest. If you stick to that, it works decently in creating a sense of attrition. It's really inflexible though and that's probably why it got changed for the next edition.