I have finished the story mode of Just Cause 2. Now I'm plowing through the settlements (aiming for a level of completion). However, the speed and ferocity in which the Panauan army defends these settlements seems to have increased dramatically. Can anyone explain why...?
The game is not, in specific, harder in Mercenary mode. However, two things may be causing your apparent increase in difficulty:
As you generate more chaos overall in the process of unlocking the story missions, you increase your maximum Heat level. This can lead to a much more rapid and strong response from the Panuan military.
When you venture into new areas, you may be in zones where you have not damaged the Panuan infrastructure as much. Taking out enemy communications arrays, air fields, and military leaders can make a noticeable difference in the enemy's response time.