Currently, the combat system suffers several problems.
* magic is of little use and of little interest
* combat is too fast, usually with a unit dealing a big blow
* squad units are too powerful

I'll present ideas that solve all of these problems.


Magic:
Magical effects on the battlefield should involve a bit more than just damage. I will not try to be innovative, and here are my suggestions to give some interest to different spells.
* Tactical spells that affect (but with no damage) troops on the battlefield are tremendously important. Due to the relative lack of mana, such spells should last longer than the current 3 turns. An appropriate value could be INT/3 turns.
* Such spells must involve : increase in attack, defense, attack speed, movement speed (slow/accelerate), magic protection, missile protection
* Other spells should be able to affect the battlefield (mud that would slow units, rocks that would make passage impossible...)
* All must be cheap (because the mage only regains 1 mana a turn) ; else, mana regeneration should be increased (which I actually think should be better). Otherwise, magic will be too rarely used on the battlefield (don't forget the game title!). I'd advocate the use of shards for that purpose : each shard could reduce mana drain by 5%, and 10% when it's related to the element of the spell beeing cast (which means cumulatively applying .95 and .9 multipliers) ; alternately, a shard could work as now and also increase mana regeneration by 10%
* Elements must have side effects for damaging spells :
  - fire should continue to burn the target, dealing damage and reducing both attack and defense
  - ice should slow the target, both in speed and attack speed and maybe reduce attack and defense
  - lightning should shock the target unit into losing it's next turn and maybe reduce defense
  - air should blow back the target unit by at least one square, deal little damage, and have it lose it's next turn
  - earth should deal the most damage
* Attack spells should usually come in many flavours:
  - spells which attack a single figure in a unit (flame bolt for exemple)
  - spells which attack all figures in a unit (fireball)
  - spells which attack all figures in contiguous squares
  - spells which attack all units in a square on the strategic map (strategic spell
* Magic spells would have to be reduced in effect (probably) after following the modifications suggested in the next paragraph. Certainly the effect of shards should. A shard should now only add something like +2 to intelligence when casting a spell related to it.

Units:
We all know that currently squads are the death of the military system. The first to field a good squad is the winner. We'll see how this can be solved.
Squads should not be much more than the sum of the elements.
  * each unit in a squad keeps it's individuality (hp most notably)
  * each keeps it's attack / defense rating
  * when attacking, each attacks individualy (i.e. a squad of four with attack 6 doesn't solve one 24 attack, but four 6 attacks. Only one counterstrike happens)
  * when the squad has taken enough hits to kill a member, then the squad is reduced by one attack
OK ; now you ask : why should I build squads in the first place ? I'm as good with 4 units as with a squad of 4.
No... the major use of a squad is that as long as the whole squad is not dead, all members will eventually survive.
This is, economically, extremely important, and makes squads worthwhile for big battles.
The other effect, as important, is that you use less space on the battlefield : Where you can attack an opposing unit with but 3 or 4 single combattant, you can attack with as many squads, making the attack much deadlier.
Both of these effect are quite sufficient in themselves to warrant that squad would still largely be used and in large numbers.
If you feel that's now underpowered, a squad could be granted +0.5 attack per member over one (round down) and 0.5 defense per member over one (round up) ; combined with the changes that I suggest on weapons, that would still make squads fearsome.
This major change in the combat system would require redesigning most monsters (which have a much too high attack rating), and spells (which might now be overpowered) ; see above.

Weapons/Armor/Combat:
The current effect of weapons and armor make armor mostly worthless. Only attack counts in the game as it is now. You know it : your first blow decides on the fate of the combat. Equip your troops with the deadliest two handed weapons, outfit them with the most basic armor that will withstand ranged attacks.
* Weapons grow too far in power. There should not be normal weapons with attack ratings of 12 or more. In particular, using a two-hand weapon should not give much more attack than you lose on defense. Usually, missing a shield cost 2 defense : a two handed weapon should thus do about +2 damage compared to a technically equivalent one handed weapon. The idea is that attacks and defense rating should stay within well bounded limits. A A6/D6 unit is almost always going to win over a A4/D4 unit. Also, if you're lagging in tech, you still stand a chance if you field more units.
Instead of ever increasing stats, maybe other paths could be explored:
* Units deal simultaneous damage by default (this makes armor a lot more desirable)
* Units equipped with longer weapons deal damage first (hence a short sword and a long sword could deal the same or almost same damage, with the long sword being much more desirable due to a "first strike" effect) ; an axe deal good damage but is short.
* Give weapons different effects ; a plate is almost useless against a mace... So a mace could be given a not too high attack stat and still be a very desirable weapon (but you wouldn't want all your units equipped with maces). I understand that this could be diffucult to implement in the current system.
*  I do not have the list of weapons here, but that could then be something like (Attack/Length)
   - fist 1/0
   - club 2/1
   - dagger 3/0
   - short sword 3/1
   - wood spear 3/4
   - long sword 4/3
   - mace 5/2
   - two handed sword 6/4
   - two handed axe 7/3
After that, there is no need for A150/D40 units which are pretty one round combat (how awful) : I attack, the unit is killed otherwise I get killed... Not fun. No tactics. Low attack values make the combat longer which is both bad (too long is boring) and good (long enough means I can actually use tactics such as retreat a losing squad if favor of a fresh one etc) ; they make also any additional effects more worthwhile
(enchantments etc)


Heroes:
Heroes are undervalued today. Let's see why:
Basically, heroes start by beeing little more than peasants (sometimes even less), and are soon distanced by trained troops for two reasons:
* trained troops have more Hp (my elite squad troop has 112hp, that's 28 per individual)
  => grant heroes similar benefits as troops on level up. And because they are heroes, you actually want to give more:
     - automatic HP increase (+2 per level seems ok)
     - current stat benefit
     - increase in it's particular area (merchant would make 1 gildar/level per turn for exemple)
     - maybe some other, rarer benefits (once every three levels)
* troops cost less to equip the exact same equipment (hence heroes are always underequiped)
  => make equipment the same cost for hero or normal troop.
* share the experience in combat instead of granting xp on all presents ; this would prevent heroes and troops from gaining undue experience.

To compensate, give per turn experience even if no combat happens.
Now, because squads (and consequently other baddies) would have been brought down in attack/defense, a good combat hero with 15 strength and 15 dexterity would have a very reasonable chance to stand against a squad similarly equiped.

Yves