Mercanary vs. Standing Army

Due to recent events in Japan I wanted to start a new thread.

A Japanese citzen, working as a mercenary for Hart, was captured after an ambush by Iraqi rebels. Now the guy was an ex-Japanese SDF paratrooper with a further 12 years in the French Foreign Legion, so we can take it he knew what he was at and what he was getting himself into.

While reading about it, a number of questions came to me. I was hoping some of those with military experience could enlighten me.

1. How can a company like Hart be allowed to exist?

2. How can they be put in the same battle area as conventional forces?

3. By killing people through their work, are they not breaking a law of some kind? I thought Iraq had made the transition to a democratic country. Soldiers and police, domestic or otherwise, I can understand, but what are effectively private citzens being given a licence to kill? WTF?

4. Why have a standing army, when you can just hire these guys? They must be cheaper, or they wouldn't be used, or am I wrong?

5. If they cost more, (I believe their wages are quite nice), why use them. What would you want to do that you want kept out of the public eye scanning the conventional military?

6. How can the companies involved supply them with all the latest gear, pay them well and still make a profit? Where does all the money go in the conventional army?

7. If you are a soldier reading this, which is better
a) Fighting for your country.
b) The thrill of the fight.
c) Making a living.

So, my main points would be, why have a conventional army? Why not privatize the military altogether, soldiers and all?

I would like to finally point out that I would be against such a rise of mercanary action and believe that the only people that should be allowed own and operate a standing army should be soveirgn states.