Does 'enduring the hardest hardships' mean deliberately seeking suffering, and does it conflict with a prosperous, happy spiritual life?

No. Speaking of enduring hardship does not mean deliberately living painfully, and greater suffering does not mean better cultivation. I also agree that life can be prosperous, happy, and enjoyable. The point is whether, when difficulties arise, you can understand and learn from them and find a way through.

Someone once heard me discussing hardship and asked why life could not include enjoyment. I replied that enjoyment is not wrong. In my early years, being in debt and being refused rental housing were genuinely painful. Only later, looking back, did I better understand what that path had developed in me and cherish my present life more. This is an understanding gained afterward, not a wish for everyone to experience the same pain first.

By saying practitioners should be able to bear hardship, I also mean being willing to bend down and work, rather than acting superior because you are a teacher or person in charge. I once saw the head of a major temple warmly welcome unfamiliar younger visitors. That willingness to serve is more worth learning than proving oneself through an austere appearance.

Hardship does not automatically create compassion either. I have met friends who, feeling no one had helped them before, did not want to help others after overcoming their problems. Understanding remains the point: after knowing that pain, are you willing to appreciate others' circumstances more and turn experience into wisdom you can use later?

Facing difficulty does not conflict with needing rest and self-care. I have also warned against overwork. Spiritual practice aims to help you move forward and have strength to help people, not to make hardship itself the purpose.