About the Huzzulen ("Hutsuls" in english, "Huţuli" in romanian)... You could find some more informations here:
http://en.wikipedia.org/wiki/Hutsuls
They are not the only mountaineers in the Romanian Carpathians, but they are a distinctive group with a blurred origin. They speak a dialect of the ukrainean language mixed with romanian influences. They live in two main areas in Romania : Bukowina (Bucovina in romanian) and in Upper Moldavia (mountain part of Moldavia, opposed to Lower Moldavia which is mainly a plain and a steppe. A large part of Lower Moldavia is now The Republic of Moldavia, former Soviet Republic of Moldavia) and in Ukraine too (Ukraine include a large part of Bukowina). Very interesting is the fact that one of the areas inhabited by Hutsuls consists of 7 villages (now 8, one of those villages is new) in a remote mountain valley, exactly like in the text you posted. They are renown for their specific breed of mountain horses.
About the picture you posted, you can see in the Hutsuls page on Wikipedia a picture with a horseman that has striking similarities with one of those in your picture but the Hutsuls don't wear their hair in braided tails like the one leading the smugglers group in your picture. This custom is specific to hungarians and transylvanian romanians in the mountain regions in south-western and western Transylvania.
About the fact that that smuggler served in Austrian army, there were three border regiments formed from romanians and one regiment formed with hutsuls in the austrian army. They were asigned especially to guard the mountain borders and they were expert skirmishers trained in guerrilla-like tactics, best training for a smuggler ;) ...
About the axes, I don't really think that they are from Transylvania (they look more like indo-persian/turkish axes), I just pointed out that the decoration pattern is similar, but I don't exclude the posibility that they could be, because there was a huge turkish influence on weapons and armor used by trasnylvanians, moldavians and wallachians from late XV century to early XIX century.

Anyone want to explore the other possibilities?