I tried the fight several times and It took me until level 16 for Nana and 11 for rabbit. I was able to reach the fight at half that level, but then again I did choose hard mode. While I didn't need to reload for more supplies the warning was still nice. Was the restriction lifting just meant to convey that Nana could revert or that it changed something else since I didn't notice anything different about her status. Also, what merchant? There's nobody else in the starting room. At least there is a healing spring I forgot existed for a little bit.
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It's the rabbit in the top left of your screenshot is selling healing items for cheaper than normal but only before you have beaten the boss. Sounds about right for hard mode, easy and normal gives you some higher base stats as well as restricting enemies from using some more powerful or annyoing moves. Yes it was mainly to convey that form change is now possible again, as awell as that the rabbit form is unlocked. Her status didn't changed but nana is now able to learn a few of the rabbit skills for her human form in town. Oh yeah forgot about that too, was just a little help so taht one would at leat be able to fully heal themself and ot soft locking them with a few HP left.