I guess what this discussion is showing is that a lot of the units we raise in the normal manner in M2TW would be in fact mercenaries (not in-game mind you) and not really so very different to the 'mercenary units' hired in the field by generals.
So there is not really any reason for any distinct morale or ability difference between in-game mercenary units and regular units.
You could view Mercenaries in-game as a preformed and equiped band ready to serve, were as hired units are (while still essentially mercenaries) formed from individuals equiped at the King's expense...
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