There are mods that already address those kind of things.  I agree to a point that the factions are not quite "fantasy" enough.  I wish that 5 of the 8 nations were not just medieval European humans,  but I think the nations have gained a lot of flavor in FE.  My personal taste fall somewhere in between I think.  I like a plethora of fantasy races, but I want them to be unique to the fantasy world and I don't want them to be over the top(fire breathing golem race or cat/lizard people). I think they were limited by technology, not using sprites limited their options a bit.  I think FE has gone a long way from WoM in terms of faction differentaion, but I can easily see it not being enough for a lot of players.  I am hoping that they add a couple other races in the future from the lore.  Edar are something like fire magic sasquatch people, and Iru are beautiful Life magic fallen with glowing tattoos like swirls on their bodies...and the Drath are also a race from this world and only briefly in the WoM.

Stormworld's temporarily down, but I suspect it will be back up again, soon.

And yet, really, this game has them.  I mean look at Tarth for example, a bunch of humans dressed in green who specialize in bows and fancy chainmail and do well fighting in small groups.  Gilden are a bunch of miners and smelters who are really stout and don't use magic very well.  I mean they may not have point ears or be three feet tall, but c'mon, these are elves and dwarves.  Hell, look at what the website says about Gilden -- "They are often called Dwarves by outsiders...".

I am somewhere between liking high fantasy, but getting annoyed at the heavily repetitive use of it in games. Stormworld has the best lore from many a stories. It's a great melting pot of high fantasy. 

In contrast, I am going for a more humanistic approach to factions. I want to cut out every bit of the usual tropes. My Tarth, recently freed slaves. A whole nation of gladiators with a chip on their collective shoulder. My Gilden, a highly ordered hierarchical caste system. My Trog, axe wielding naked barbarians. It doesn't to be fantastic as long as it is interesting.

The core lore falls short in being an intrinsic factor in gameplay. Factions do play differently, but we don't always get enough to make strong distinctions. There certainly is not enough follow through on the lore being interwoven into a faction's abilities.

But I would guess that people are either okay with that or they will play mods to get more of it. Hoping so actually.

i wish for yet more faction differentiation. But am pleased with what we have already (knowing that modders and devs will be adding more). For now i got enough different types of toy soldiers to play with. i mix em all up depending on the story i create for them. Like Tarth, is Huntsmen or Ranger at some times. Brigands and Mercenaries others. Sometimes i create a faction and sovereign whose more ethereal than physical. Sometimes brain dead beasts, reanimated dead, much more. i do seek greater tools to better express these "homedreamed' creations, but for now i got loads of options. i've yet not played any mods cuz i'm still finding fresh options with the default.

I think the main reason why all the factions felt bland / almost the same are :

1. Too little units and buildings differentiation provided by Stardock. For the example, generic Mage can be differentiated to Necromancer (access to Summon Skeleton spell), Druid (access to Entangle / Charm Animal), Warlock (bonus on elemental dmg) etc.
2. The customization processs still provide too little differentiation for each faction, imho. Once you get the same techs, you will be able to build sam units regardless your faction is. I think it will be cool if I can design Resoln cavalry units without access to horses/wargs, and have them mounts spiders, for example.

Me 2, kind of bothered me, the custom units like juggernauts and golems where a step on the way, but wasn't implemented with enough separate units.

Sincerely
~ Kongdej

Winnihym, stop talking about my mod! I don't want to become too vanilla.

Minor correction.  Tolkien was a very well read man, and greatly influenced by the fantasy of Lord Dunsany, who wrote about elves, goblins, terrible evils, great swords, etc, and in exactly the language Tolkien copied.  This doesn't lessen Tolkien's accomplishment, but it's only fair to Dunsany to point that out.

And some of his stuff is available online, for comparison.

Should almost do a poll on this:

Would you be willing to give up player designed units to have a greater visual variety in the races?

Basically, the limitation is that each body type / skeleton requires its own set of clothing, armor, etc.  

I like my player designed units. That was a huge feature FE.

Hell No.

No freaking way. One of my favorite parts of Stardock TBS are these.