This is an interesting and very creepy town with a problem, but I'm not sure how much complexity there would be in actual play.
The player characters will realize something odd is happening, tour the increasingly unpleasant town, decide to go to the gate, get into a conflict with the guards, the Mouth will show up at some point and either the PCs will identify them and take them out or won't and will likely get overwhelmed.
I would add in some way to find out that the Mouth exists and is in disguise (maybe a journal or a letter sent to the adventurers that draws them to the area?). As it is, it's not like the player characters are going to be staying in town and slowly picking up that something's wrong -- that's clear immediately and they're either going to try and resolve it or run for the hills. (Run for the hills being the obviously smarter choice and let someone else save the world.)
Alternately, maybe the enthralled shouldn't be quite so overt with their status, so that players will only start to figure out how bad everything is after staying in town for a bit -- ideally viewing this as their "home base" between other adventures.
That said, this has atmosphere for days. It feels like a horror movie that unsuspecting PCs will wander into.