Yes and no. The merc recruitment has to do with the scripted money assistance. The RTW AI hates the human player. As a result it will keep recruiting new troops to fight you until it runs out of population or money.
Blockading ports dosen't affect the AI in any noticable way in EB.
Since the AI never goes into financial straits due to this limitless treasury. It is less likely to accept diplomatic proposals and more likely to try to solve things by force.

It will use a force of native troops it recruited to try to pound you into submission. If you survive that due to excellent tactics and fighting it will simply spam another one. Due to some regions being very merc heavy the AI will often choose to recruit an all mercenary stack. The reasoning (RTW coding?) is simply that they are available immediatly and since the AI allways has the money, it's easier for it to hire an insta-stack of mercs then spend several turns recruiting native troops from it's settlements.

The problem is highlighted if you use one of the money scripts without the modified merc file. Even when the AI has the MIC's to recruit native troops of good or excellent quality it will often supplement it's stack with some mercs to give it added punch. Only when you beat one of these stacks does it recruit the full mercenary stack. Simply put. The AI has too much money and access to too many mercs. On the other hand if it didn't have the money, it would be a pushover for the human player. Not much challenge in that.