not sure of the total effects with changing campaign difficulty, but on the RTW disc it has a note about it in the release notes:
Auto Resolve Battle Difficulty
When choosing difficulty settings at the start of a campaign, changing the difficulty setting for the campaign will affect the way the game auto resolves battles. The difficulty of the auto resolve inherently affects the difficulty of the campaign game, and so determines the level of challenge on the campaign map. The battle difficulty is solely used to determine the level of difficulty when the player is playing on the 3d battle map.
- so campaign difficulty is the culprit