For a group of three, I would definitely lower the power level of that ability. Perhaps just add 1d4 damage and leave everything else the same?
For larger parties though, it's really not that bad. Well, provided you have a Defender that is.
When my party hit the Irontooth encounter we accidentally combined the outside and inside of the waterfall area into one encounter (we defeated everyone on the outside, but the DM said we entered the waterfall without taking a short rest, so we were low on HP, surges and encounter powers). That's the main danger for most parties, because they'll be dealing with a LOT more enemies and they'll have fewer encounter powers to deal with the ones inside.
We were able to beat the encounter thanks to some sound tactics though. The Strength Cleric and I got up in Irontooth's face and backed him up to a wall. I was able to hit him with Villain's Menace, which gives a +2 to hit and +4 to damage, and our Wizard was able to drop a Flaming Sphere right next to him. Because of his ability he was forced to keep attacking me over and over, which was okay since I'm a Guardian Fighter. It also meant he wasn't getting away from the Sphere. Eventually, we took him down with some focused fire and then cleaned up the rest of the cave.
Obviously, such complex tactics won't work with a small party. Provided that they at least have a Defender though, and hopefully either Guardian or BRV at that, you can "arrange" things so that when Irontooth gets bloodied he goes after said Defender...rather than say, charging the Cleric. That might mean fudging the numbers a bit so that he's actually "bloodied" a round after they reduced him to half, but I don't think that's throwing things in
too much in their favor.