I play multiplayer with friends just to play. I could care less about scoring and stuff, but since my friend is at a lesser skill level then myself (not sure how to word that nicer :/), he hosts and chooses songs with difficulty I can FC without problem, and it gets boring. Songs and difficulties I pick usually end up with him failing, then him quitting in rage :p
Me having the ability to put on mods like hidden or flashlight on lower difficulty songs would be pretty nice, if they only affected me of course. That way, my friend can still play and pass songs, and I can get some fun (and practice with hidden and flashlight) out of it
I would imagine allowing "every" mod though wouldn't be good though. Specifically, I'm talking about time-altering mods though (half/double time). I don't see any problem with just hidden, flashlight, no-fail, sudden death, and easy though on Head to Head. Hard Rock might become some type of problem on tag or co-op though.