According to Osho, he stresses 'be happy' as a device: hearing it makes you acutely aware of your actual unhappiness, destroys consoling hopes, and drives anguish to its peak. When suffering becomes total, you see you are the one clinging to it—the ego—and it drops by itself. This cathartic climax opens the space for real freedom and enlightenment.
He keeps saying “be happy” so you notice your misery so completely that you let go of it and the ego falls away.