I just quit a run on Normal to start one on Hell (trying to see if the items sold are higher level) and now my inventory is almost empty. When starting the new game on Hell, my inventory had a couple of +Magic items so my warrior can read books and was otherwise completely filled with gold. Now a 7x3 area in the inventory is empty.

Did you forget to save?

So, before starting a new game, you have to save the old one? Thanks! Now to redo hours and hours of grinding...

bruh ... ofc, in single player you only update the save after ... saving xD that's the base for "new game" character

In multiplayer, there is no explicit save, and the game saves characters as it sees fit, so this might have worked in multiplayer.

If you want to know the rules under which vendors operate, Jarulf's Guide describes it in great detail. Read section 3.9 ("Item creation in town"). I see in there this statement:

Difficulty does not affect it in any way.

The whole section is worth reading if you want to know how this works and what you can get.