I play at the Hard setting, and with MMM. FWE and FOOK2. And yes, I die a lot...
I avoid Super Muties when they are in large groups, and get most of my kills from long distance head shots with a silenced sniper rifle.
I feel that with the game more difficult, it is less of a "shooting gallery" game, and more of a game of strategy and tactics. Land mines play a big role in my strategies.
For instance, if I decide to engage a large group of enemies, I'll spend some time laying out a mine field in a strategic location, then engage the targets so that any that rush me will be drawn into the mine field.
If I do happen to get drawn into a firefight, I try to keep at least one escape route available to me. If things get too intense, or I start to get over-run, I can back up to another location for better cover. I always try to keep from getting caught in a corner.
I've had it on Normal ever since I started playing. I may try Very Hard, but I always run out of stimpacks and ammo (for the guns I use anyway, up to my ears in everything else. This bothers me) on Normal. That said, I do love games where you have very low ammunition. Makes it far more intense. I guess I'll try Very Hard on my next playthrough. Anything I should know?
Save often.
I thought all ammo was scarce on Very Hard though? This poses a problem for me as my main weapon is the sniper rifle, and on all my playthroughs .308 ammo is hard to come by.
The game difficulty doesn't affect loot. It just modifies the damage formula for your character and the computer controlled characters.
At Normal difficulty, you are pretty much playing on an even scale with the AI.
Increasing the difficulty causes your character to take more damage while the AI takes less.
Decreasing the difficulty causes your character to take less damage, and the AI takes more.
The experience gain formula is also affected. You'll gain more XP for playing at a more difficult setting than you will playing at an easier setting.