When you play MTW2 on normal, you don't really get the feeling that it's that easy(you said you want the AI to attack first and I have to say that happens frequently) , but of course when you start on hard first and then go back to normal, it might feel a lot easier...

When I play a new game I always start on normal so I can get a grasp on the gameplay and such. Perhaps you could try on normal and see how things go?

But remember this: NEVER GIVE UP! NO SURRENDER! even when thing look bad, don't stop playing...try to solve your problems. Did the medieval lords get a second chance?