Having fewer buildings means you can get to the core of the game faster - producing armies and hording gold to equip your heroes. It shouldn't be necessary to construct something every turn. The only thing that bothers me about this is that cities have nothing to do after they have completed construction. A trades good/housing/research option would be nice and would probably help with the excessive time the research portion of the game requires.

There are some improvements that you can pick when the city levels up that give you an effect like that if the city isn't building anything

I see bonuses to constitution, strength and dexterity as the best way to give some Kingdoms who focus on a strong regular army. As far as balance, any medium that gives you such an advantage (probably a barracks upgrade) should also weaken some other strategy. That way you can't have stormtroopers and godlike heroes. So you heroes would get a level cap or perhaps a trait that makes them get far less experience, but those stormtroopers are very powerful. This kind of balance will lend to very unique strategies.