In RTW, battle difficulty worked mainly by upping the stats of the AI units relative to the player's. I am assuming this is still the same in M2TW? It was also said that on VH the AI was more hostile to the player - less willing to make alliances or make peace. In RTW, campaign difficulty seemed to largely affect the income of your enemies - on VH, the AI could often muster repeated full stacks of troops. I'd be interested to hear anything people have been told or observe about the effect of the various difficulty levels in the game.
