This merc thing is just supply and demand + player demographics. There are large amount of new or returning player pick Asura as their server after reading about it being the biggest on public forums. There are also large amount of player thats not in top end endgame linkshell transfer to Asura because they don't have a group to kill things, so "Transfer to Asura" becomes an easy and fast way to solve their problem. This kind of players, in general, has less experience in endgame setting because of their background: you get endgame experience by actually doing endgame, so if you're not in endgame LS you won't have the experience.
The result is that, you have this 1600+ people server with very high percentage of player that's not part of top end endgame community, nor have the experience/connection/reputation/understanding of FFXI core mechanics to get in. They don't have a reliable high end group/ls to kill things for their gears and more or less have to resort to buy gears.
On the other hand, the top end endgame community are much smaller (as percentage, not actual numbers) because many of these groups also merc for gil with tons of potential buyers. The nature of merc is that you only take absolute bare minimum of people for maximum profit. If you can kill T4 with 4~6 real player and split income 4 ways, there are 0 reason to take 18 people and make less gil per run.
Because of that, many high end merc groups only recruit people that carries more "weight" in a group. Such as players with geared mules access, multiple key jobs to merc efficiently like REMA BRD WHM SMN epeo RUN idris. They usually don't recruit people with only 1~2 not meta jobs due to inefficiency for merc.
Some other endgame LS may not actively merc, but they may also end up being full and not very easy to get in since those who can't get into high end merc group joins them. Once you have 18/18 in an alliance you won't be able to fit in anymore people. So the only spaces available are for rare jobs, such as BRD idris WHM high end SMN etc.
In other words, if you're a new/returning/semi casual/less experienced/not so versatile player with only (mediocre) DD geared and leveled, it will be really hard to get into top end endgame groups. Because half of the high end groups merc and keep their numbers at bare minimum for maximum profit, and the other LS are often full and no space for more people. The rest of the players that can't get in has to buy gears and it becomes vicious circle.
Merc is less frequent on smaller servers because:
1) Smaller servers usually are not top pick for new/returning player/semi casual players, thus less potential buyers to buy gears.
2) Top end groups on smaller servers generally has more space available because the endgame community is much smaller. So many geared characters gets in a lot more easily, and won't have to worry about lack of groups to kill things, nor they need to buy gears.
I don't think HP scaling is the reason behind merc. Even without HP scaling, merc groups would still run things at bare minimum to maximize profit gain.