I like the goblin camp idea too. I'd suggest putting it maybe in the plains area west of Terinyo, maybe, since there isn't really anything there.
The leather armor is fine as a reward. Stronger PCs with good armor can kill Kranach for the gold instead. An enticing alternative might be something like a blessed potion of healing or two, and/or maybe a potion of cure poison. If the camp can always be found (unlike Kranach), and you only have to kill a bunch of goblins, then the rewards should probably be something with value considerably less than 3000 gold.
Hoping to win with every class, doomed. Archer, Barbarian, Bard, Beastfighter, Druid, Elementalist, Farmer, Fighter, Monk, and ULE Priest down.