The Watcher is the spirit of The Joker.While some of his comments make it seem like he was never human, he also makes comments like the one about having always hated going to church. Plus, there's the voice and personality. Oh, and Wicked K mentions the Justice Lords. So, there's that.
The "Mercy" gun War gets is a replica, thus being weakerAs revealed in the third game, Strife did work along side the makers. For whatever reason while it was made to help War, they couldn't make it to the same level of strength as the original. Death in the second game in contrast, finds one of the original guns.