I just tested your guess and it was wrong but it was a good guess. The only thing different about easy mode that I could find is that you can increase spirit over 3 in character creation and level ups fully heal you
If you want to lose, use the surrender button and the perk tactical defeat. Reason 1: No chance of accidentally winning. Reason 2: Free exp while "adventuring".
I just figured out the healing level up thing. In easy mode, level ups fully restore spirit, energy, and arousal. In hard/ normal mode level ups partially restore energy and arousal. For some reason, this info is not in the wiki.
Could be the challenge mod nerfing level ups. Other than that, I don't know what could be causing differences.
Forgot to add this. The partially thing came from me leveling up after beating the first salaris encounter in the caverns I remember that my energy was full but arousal was left at around 30 ish. (I don't fully remember details)
I don't really remember wether I was. Also, I am not complaining, I am just trying to figure out what the difference between the difficulties are. Another thing, I have read what the challenge mod does. The effects of the challenge mod are optional. the effects are either, 1: double spirit loss, 2: immediate loss on spirit loss, 3: no sex skills, can only use the whip and other holy weapons, or 4: nothing.