If you actually want a sourced link to what Dresden himself has said, here.
http://www.twcenter.net/forums/showt...ficulty-in-0-8
"The mod is basically designed around Normal battle difficulty. I know some users play it at higher difficulties, but the AI will get bonuses and it can affect the way battles play with morale and other issues."
Like I said, it's designed around normal. Higher difficulties buff AI units which are finely tuned using normal as a base. At hard, there may be little to no issue, but at very hard and legendary you're not actually playing the mod how it was designed.
Primarily, like in the linked post, it has to do with morale.
If you're fine with having to kill the entire enemy unit before winning the battle, you probably won't have an issue with that. But they're supposed to usually route at 50-60% casualties.
It doesn't seem like a lot of people enjoy playing a game where every single person from elite praetorians to hastily assembled mobs are super men. Though some probably do, hence some of the sub mods.
As for campaign difficulty, again, normal is the standard, designed for difficulty. But Hard is almost indistinguishable besides some higher AI aggression. Very hard can create some odd instances with single city states created full stacks every single turn and tearing apart other states dozens of times their size.
That comes down to personal preference because the campaign difficulty won't necessarily break the game, or the tactical battles themselves.
Edit: Also, in the future. I'd advise against telling someone they're wrong when you're asking for an OPINION based answer in the first place.
And further more, asking for a suggestion and telling someone they're giving you the wrong answer is a quick way to irritate someone.
Your optimal could be too easy for someone else. Or it could be too hard for yet another person. It's not a one size fits all question, or answer.
You should really just play around with the difficulty settings, and if need be, various sub mods, until you find a difficulty you both find challenging and rewarding to play on.
The reason so many sub mods exist, as well as the different difficulty levels, are because people are going to want to play in somewhat different ways than other people depending on personal preference.