Yes, the only time you can get into the back room is when he is listening to the bard. Even if you get him out of his shop (mage's special move, or use a spider statuette and chase him out), he will still teleport you out of the back room (with most merchants, you can use those techniques to loot their shops once you get them out of sight).
The harder level made it more challenging, and using a different style (ranged vs melee) was enough of a change that it didn't seem monotonous. I only made it to the bottom of the catacombs (not the most interesting section of the game), but was getting Bow Expertise and my character stats up enough that hit-and-run tactics did not involve quite so much running, and things were looking up. I don't know that I would expect it to be just as enjoyable as my first game; possibly, since it at least started off more challenging; possibly not, since there was not much left to discover and little I would do differently quest-wise. However, this is the only RPG I have ever even started to re-play without at least a year delay (ie enough time to forget most of it).
