Actually, I'd agree with your first post. I doubt any true mercenary would deliberately fight for the losing side in every battle. The losing side has a tendency to, well, die, and it's only your immortality and god-like power (when compared to every other army in the game) in M&B that prevents that. Switching sides to maintain balance sounds more like old school True Neutral druids, before WotC realised that seem to result in too many cases of Chronic Backstabbing Disorder.