Patch notes say it's for non rate BGs and ashran. I would assume wargames are not included in Mercenary Mode as well. Also, Patch notes say the NPC requires long wait times and is located in the 100 zones outside Ashran.
My guess is the game is only tracking level 100 BGs? Anyone know?
I think the way it should work is that you tell the NPC you are willing to do mercenary work, then they automatically send you to whatever side needs help. No reason the NPC couldn't be there all the time, except Blizzard has lots of ideas they can't implement 100% correctly.
My way seems more immersive too. Creates a third faction of mercenaries, which makes more sense compared to what they have currently, which is more a traitor mode.
It should work on low lvl ppl aswell, I did some skirmish arenas last night and I kept getting into mercinery mode on my horde and could not mount my horde mounts, I also got the "of the Alliance" title instead of "of the Horde" but I couldn't use any alliance mount either. Could be a bug but I think it's possible at low lvl aswell.