tldr version:
1) Change the quest order
2) (Probably) Buff the chaos diplomat
3) (Possibly) change the Hotz quest entirely

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The Ice Queen's quests are a bit weird in that:

Quest 1 is long and reasonably challenging with a great reward.
Quest 2 is easy (I've never failed to 1-shot the diplomat - although my characters have been pretty buff) with a great reward.
Quest 3 is a pushover, but requires crossing the map, with a fairly pointless reward (so easy to get elsewhere). Also another NPC already gives killing Hotz as a quest objective.

If the quests remain as-is, I would recommend moving the Hotz quest to #1, the diplomat quest to #2, and the giant cave quest to #3.

Alternatively Hotz, Cave, Diplomat also works, but in this case the Diplomat needs some buffs as he's just a joke right now. In fact, he could use some buffs no matter the order.

Another alternative, change 'Kill Hotz' to 'Kill Kherab' and buff the reward? Althouth the Ice Queen gives a load of great stuff already...