Okay, so here's a set of fairly fluffy challenges that I think would make for a tough game when taken together, while still allowing you to have fun (4-mission TFTD is well into masocore territory).
0) TFTD on Superhuman difficulty.
1) Iron Man.
2) Council funding only (hacking PURCHASE.DAT to zero out the sale price of manufacturables and recoverables is enough; I'm not a monster).
3) No use of Control Implant. All other weapons and tactics (aside from exploits) are fine.
4) You can't run from Terror Sites (and Artefact Sites). You can ignore them entirely, you can win them, you can fight to the death and lose the sub, but you can't give up once you've landed. (If you get a stuck alien in a ship mission, you can kill it via save editing - again, not a monster.)
5) Destroy all the Alien Colonies before hitting T'Leth (this really isn't that hard compared to the others - but it's thematic).
I think the combination of #2 and #4 should keep the strategic game more of a nailbiter than it otherwise tends to become. I know when I was doing my run with #1 and #3, the tactical game remained crushingly hard while the strategic game was reduced to a farce after May or so (I eventually gave up on #3, but that was because the aliens were being very uncooperative with Calcinites and I got sick of just spinning the wheels). I think that in TFTD there are no infiltration-immune countries, so #2 puts you on a timer (though not an especially-strict one), and #4 makes actually losing from score at least kind of plausible (I ended up running from a Tasoth ship in April - if I hadn't, I'd have gotten a -300 that month either from ignoring it or getting wiped out).
So, anyone feel like trying this?
EDIT: Hacked PURCHASE.DAT attached (all manufacturables and recoverables have sale value $0). Unzip this into the folder containing the save you want to limit to Council Funding Only (not the main game folder - X-Com stores this data per save), overwriting the file already there. There's nothing in particular you need to do to undo this - clearing out the save or saving over the slot with an unaffected game (such as a new game) will both get rid of the alterations. This should work for both DOS and Collector's Edition, though I made it with DOS. Don't try to use this on a game of UFO: Enemy Unknown - it's not compatible.