This power has already been debated in a couple of threads, including
this one in which Ari Marmell expressed his view as to its proper interpretation.
kerbarian said:
If the secondary attack is supposed to be indented under Hit, that means you get a secondary attack each time you hit, for an average of three attacks if you hit half the time.
If the secondary attack is supposed to be independent of whether you hit, then you always get exactly one secondary attack, again for three total attacks.
Correct. Ari prefers the first interpretation, I argued that the second was correct. I now think Ari's probably right, however. Either way, as you say it makes no difference (assuming a 50% chance to hit).
Btw, in your analysis I don't think you accounted for Weapon Focus giving +3 damage at Epic tier, which makes the comparable damages:
Rain of Blows: 3w + 3*mods = 6d6 + 3*(6 enh + 8 stat + 3 feat) = 21 + 3*17 = 72
No Mercy: 7w + 1*mods = 14d6 + 17 = 66
I don't think that this makes Rain of Blows strictly better than No Mercy, however. First, No Mercy is Reliable. Secondly, having to deliver one's damage via multiple attacks makes room for more Immediate Interrupts or Reactions to come into play against the attacker (p 268 of the PHB gives the rules for Immediate Reactions against multiple attacks). Third, as others have noted, Resistance applies multiple times. Fourth, Rain of Blows requires a minimum Dex of 15 for the additional attacks, which a Fighter otherwise may not want.
Nevertheless, a Fighter who qualifies for the secondary attacks from Rain of Blows would probably prefer to pick up Force the Battle which would give +6d6 (ie +21 damage) to a Rain of Blows (or, perhaps, Storm of Destruction, which deals 20d6 + 2*mods for an average of 104 damage).