Clearing a side-quests takes effort, and is probably not going to be done in one turn, especially if you play it early on. I don't wanna to pay 2 for something that will hamper my progress for two or more turns. If we consider that it'll take us several turns to clear it, the threat increase at the end of the round kinda mitigates the benefit. Also, you can't have more than 1 of those in play at the time (well, you can, but good luck keeping up with them). If you ask me, 3 cost event that would lower each player's threat by 4 would be probably worth it. But cost 3 side quest that would force you to quest on it for several turns after? Nah.

So what cost would you put on it? If you think 2 or 3 is too expensive, I guess you want it to cost 1 or 0? But this enables any deck with 24 threat and a spirit hero to start in secrecy. I think that just serves to make Spirifindel even better.

There HAS to be a sidequest that lets you play with faced up encounter cards while it's active.

I would cost it 1, but limit it 1 per deck or something. An alternative restriction might be brokered to facilitate a cost less than 2.