Parties and Armies:

The whole differentation between armies and party's seems mostly pointless. Hard Rules like those really ruin game immersion and it wouldn't make the game funner or more strategic.

As long as it could be balanced wandering neutral parties that actually effect the world is something ive also wanted. Probably more important issues to deal with first though.

Conquest:

The manditory garrison idea and requiring troop stacks to attack cities are very good ideas and would fix some issues. Serious unrest in any city should lead to rebellion that can cause you to lose cities.

Balance:

A lot of people have been saying the same thing and I am one of them.

I think those are all great ideas. Resistance from conquered cities seems to be a "must," and I love the idea of adventuring parties being a lot more mobile than armies. To facilitate that further, perhaps parties should have less of a penalty (or no penalty) when going through rough terrain, and of course there should be a lot of rough terrain to negotiate. After all, a small group of heroes going up into the mountains to take a shortcut around the big army that's relegated to the flatlands and wide mountain passes is a fairly standard happening in fantasy.

Units that are stacks of soldiers only being able to get taken out one soldier at a time (unless there's an area of effect or another special attack going on) also makes a lot of sense and could help balance the game. You could compare a stack of soldiers with an Immortal unit in Starcraft 2: They effectively cap how much damage they can take at a time, making a swarm of units dealing relatively-low damage more effective against them than a single unit capable of doing more damage (like a champion) because a lot of the latter's damage potential is "wasted" on them. This would encourage champions to fight things with higher hit points and defenses -- like other champions! That sounds like an ideal thing to encourage.

You could also have some fun implementing various abilities, traits, spells, equipment, etc. that partially makes up for this damage cap issue. For instance, there could be a Cleave attack that makes leftover damage go on to the next 1 or 2 soldiers in a stack, but it doesn't go on indefinitely, and perhaps it only deals 50% of the full potential or something. Another example could be a special second attack that is made against the stack if the champion kills a soldier in it (but it's limited at just the 1, so it doesn't get unbalanced).

I like the rough terrain bonus for Parties. This would make them more mobile than Armies and is very characterful. 

There are lots of Traits that could come from this system. For example, a unit could be designed with a Police / Guard trait that reduced unrest in cities. These units would be great for occupied cities or heavily oppressed home cities. 

I would also like to see a return of options when we capture a city. Let us Raze it, gaining lots of loot. Make this take one turn to give reinforcements a chance to save the city. This should cause massive diplomatic penalties. Looting the city gives some money, kills some population, and causes high unrest. Occupy causes moderate unrest. If liberating a city, you can return it to the original owner for a massive diplomatic bonus. We could have traits tied to this. So a unit with the Looter trait adds a gildar bonus when Razing or Looting. 

I like these ideas, and I think they would be worth trying out at some time.  Having the rough terrain bonus for parties would allow them to nip into a neutral side's territory and complete a quest or the next stage of a quest, and preventing champions from taking cities on their own would reduce steamrolling tactics, and it just makes sense that cities have to be sieged by armies, not just powerful individuals.

I like the idea. I mean not sure if we need an official nomenclature distinction between a Champion Stack and an Army, but CERTAINLY we could change the functionality of it

If stack has no 'units' -> cannot attack cities, CAN retreat from battle (as long as no 'owned' unit has attacked yet), CAN go on quests and pop quest huts

if stack has 'units' -> CAN attack cities, cannot retreat, cannot go on quests or pop huts.

I also agree with City resistance ... a conquered city needs units to garrison it until the dissent/rebellion is quelled. A conquering army that has lost all its 'units' in battle cannot raze the city after being victorious (can only abandon the city to either become a bandit-city or revert to previous ownership) ... must bring more units in to garrison the city.

(this assumes that 'units' have a minimum number of soldiers and that you cannot make 1 soldier units. Otherwise, units of 3 soldiers or less do not count as units for these purposes)

Additionally, I think it would be nice if Champions could attach themselves to units (like commissars and priests can in Dawn of War), and later detach themselves from said units. In such a case, the Champion would be the last soldier of the unit to get attacked (assuming melee attacks).

A small bonus to champion strategic movement would be an interesting and simple experiment.

I totally agree with the way this is going and would like to give my ideas on how to make this work.

All units should have a Siege trait that you have to choose when designing the unit. This trait would be required in order to attack a city and the trait should not be learn-able by the sovereign and his/her hero's.

This would be an easy way make it so that you cant just take on a city by yourself, also as long as at least one unit with the siege trait is stationed inside the city, it should reduce the unrest of that city by 5%.

Each unit in a Sovereign or Hero's army should reduce the movement speed of the army by 1 down to a minimum movement speed of 2. This would slow down the ability to steam roll over enemy cities.

I think that the Sovereign and hero should be able to do quests while grouped with regular troops if he or she wants to so I would not change that.

Also they should make the Cloud walk spell cost 10% of your mana, so if you have 1500 mana then it would cost 150 to cast the spell. This would make you think twice about casting the spell to hop around with one super group of hero's  

While I appreciate this way of thinking, I don't really support this implementation.

Having rules which apply differently to different configurations of champions creates a burden of knowledge. We must understand these rules before we understand what is actually going on in the game. In general, this is a huge no-no in the game design world. It weakens accessibility and (more importantly for us) playability. Sometime's its unavoidable, and sometimes the benefits outweigh the cost.

In this case simply being required to take a unit with you to attack cities, and no allowed to take them with you to do quests does not provide any real benefit. Actually it just hampers and slows down gameplay. The only thing this does is make it so I'll remove units from my SoD before I turn in or start quests.

Your latter idea of simply having champions only able to hit 1 or 2 units in a group per attack by default is a better solution, imo. This should apply to defense as well (armor only applies to the first x attacks from a single unit). This would require a complete rebalancing of groups, champions and monsters obviously, but it would put the champions in a questing role (with the option of supporting war or becoming war heroes through trait selection), and the amies in a conquer/defense role.