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Actually, according to this site in GoW2 Kratos is High 6-A.
He is only High 6-A near the end of the game. In the beginning he was depowered and reduced to his Demigod self. Kratos gets huge power boosts even within a single game. In the beginning he couldn't even budge Typhon's fingers - the same Typhon who by feats is genero7sly tier 6, tanking a large mountain being tossed at him and via scaling to Thera. By the end of the game he contends with Atlas in strength, who is confirmed by Word of God to be the strongest Titan.
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Being bound to them is not proof he is that much weaker than them. Serving someone doesn't show disparity in strenght. Even in game Ares had Kratos bound to him yet still wanted to make him powerful enough to bring siege to Olympus.
1. Ares's scheme was to try and make a warrior with his twisted view of a perfect mindset, ie. a warrior who cared for nothing other than bloodlust and the heat of battle. His method of training said warrior is unexplained.
2. Poseidon's Rage, a magic ability that Demigod Kratos has that scales above the Redeemed Warrior, is stated to be only a fraction of Poseidon's power. This suggests the powers granted to the Champions by the Gods are a mere fraction of their own, which is even further supported below.
3. Word of God establishes that the Warriors of Zeus are granted only a fraction of Zeus's speed, even when amped. Which should already show you they're not even close to the Gods with their granted powers.
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The chains could also have been undone and then put back again. The chains were even in different positions from GoW2 and Chains of Olympus. In Chains of Olympus the chains are wrapped below his wrists but the chain broken in GoW2 is located on his palm. Not to mention that Atlas has even more chains in GoW2
He doesn't have more chains in GoW2. That's just because the PSP's limitations prevent the gameplay from showing much in the way of in-gameplay action. The cutscene where Kratos and Atlas speak to each other after Persephone's death shows Atlas with the same amount of chains as in God of War 2:
http://static.comicvine.com/uploads/original/12/128614/4017378-2532318936-Pilla.jpg
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That's speculation at best. Unlike Kratos there is no evidence of Hercules being any different than from the two time periods. Him being KO'd has nothing to do with anything. You don't need to outright kill someone to be at his level.
Nope. Kratos was the God of War for at least 13 years as revealed in God of War 3, and Ascension takes place ten years before God of War 1, which is when he was crowned the God of War.
Herules himself states that he was sent to retrieve the apple at the same time Kratos was being crowned the God of War. So Ascension takes place at least a full ten years before Hercules's labors ever take place.
There is zero reason to assume Hercules didn't get stronger. The fight between him and the Redeemed Warrior is canon to God of War's lore, and it took place long before he ever did anything impressive. So the burden of proof is on you to prove Hercules was already that strong back then.
Hercules's world holding feat clashes with the God of War lore anyway, so it's very unlikely it happened.