I thought I should get back and report back my short experiment. I rehire 12 new level 1 brothers at Day 63 and played until Day 85. I only managed to complete 6 contract. 3 contracts were patrol, 2 were delivery and 1 was to clear cemetery.
My new recruits were modestly equipped with hand-me-downs from the previous bath but definitely better off when compared to brand new mercs.
I found that Sky’s comments were correct in that world progress continued and I had a lot of difficulties clearing global spawns (with multiple reloads).If I can clear the battles with only 2 or 3 casualties, I don’t reload. Needless to say I spent a fair amount of gold rehiring.
As to whether the contract difficulty scales – I am not so sure. My last contract was a delivery with 1240 gold as a reward. It turned out that the cargo had a bunch of undead – 17 of them with 14 skeleton/skeleton guards and 3 Fallen By then my mixture of Level 1, 2 and 3 were not enough.
so my conclusion is if I ever had a bad fight in Iron man mode and only got 1 or 2 mercs left after a tough fight. I would probably restart. Unless the scaling mechanics for contract can be more accurate. Otherwise it will be very time consuming to level up entire brand new warbands mid-game.