I've also had graphic problems, but only in the Denmark-Holy Roman border where I hunt raiders. Very annoying. I'm using 0.8.
About difficulty, I like it that it is very hard. Normal M&B it was way easy to kill everybody with plate mail and stuff. Now I'm scared to even go near a group of average troopers and those knights really are devastating and deadly. I'm a good player, but now I'm having my ass handed to me.
The game is now very nice, exciting and makes one really fear the enemy. No longer am I a SUPERKILLERKNIGHT model 9000XTSPROPLATEMAILHERO, Now I'm just a guy full of fear and usually if too eager on the battlefield I end up lying on the ground in my own pool of blood. I have pretty much all difficulty settings maxed, very challenging, but not impossible. Really waiting for next release. Thanks for this mod.