Negotiating costs are based on the cost to scout a province. The more it costs the more you must pay to negotiate. So as you progress in the game the costs increase to match your technology increases. You can of course scout further if you have the production to keep up. Note because it is based on the cost to scout the rating really has little bearing on negotiation costs and these costs don't change once you have scouted a province.
So this is really about how much money you have and/or are willing to spend. Fair enough.
The very hard rating can give you an idea of whether you are scouting beyond where the game is balanced for but this is not always the case. You get a very hard rating in provinces in chapter 2 even when you are inside the minimum number of provinces you need to obtain, this is due to an imbalance in the combat mechanic at this stage. It is not until chapter 5/6+ that this starts to balance out.
This combat imbalance is obviously planned by the developers. I'm wondering why? Since it is in the early stages of the game, it seems to me to be a way to cull the casual players, leaving the serious players to keep going, so to say. This may explain why I have so many neighbors who are "stopped" at a main hall, some residences, and maybe a workshop and/or factory. I visit them every day and their cities never change.
The cost of already explored provinces will not go down when you research advanced scouts. That tech only affects un-scouted provinces. Squad size techs do help the rating as it is a comparison of squad sizes, but the enemy squad size and the cost to negotiate will not change after scouting.
So it sounds like it is not to my advantage to scout ahead unless absolutely necessary at this stage of the game.
That is the challenge and why only you can decide what the best action is. if you are in chapter 2 how many provinces have you scouted so far? Chances are you will need the steel one to get into chapter 3 anyway so it may not be a big issue whether you do it now or later, either way it will still be very hard. Sadly your in the hardest part of the game for combat.
I have scouted 22 provinces and have completed 18. I know I need to complete 25 to move on to Chapter 3, but I've got time. I still have 7 techs to complete.
Nope, orc heads are a cap on negotiating only. Combat is limited by the enemy squad sizes, pretty much anything hard and very hard will stop most people from combat regardless of chapter.