There's one thing that I've always found awkward in Fallen Enchantress: the way the "city defenders" system worked. It could use a lot of improvment.

Basically, naked peasants with lightning hammers feels weird, doesn't give any choice for the player to make, and in general isn't very interesting. The point of having city defenders is to make every city invasion difficult and epic, a certain resource commitment. But giving basic peasants the best 1-handed blunt weapon and no armor frankly doesn't seem a very interesting way to implement city defenders. They feel out-of-place as a militia.

Also, I don't see why a level 3-4 city (or even level 2, why not?) couldn't have dedicated, decently-equipped professional defenders - Town Guards, or whatever name you want to call it. In other words, it could make sense that with the right buildings, leather-clad spearmen, swordmen or archers could be spawned to defend the city instead of those weird peasant militiamen.

In general, though, automatic weapon upgrade just doesn't cut it. Lightning hammers and such magical, costly artifacts doesn't seem like the sort of thing town defenders should have. They should wield spears, bows, halberds, maybe broadswords. Lightning hammers are especially bad because they're so level dependent, it doesn't make sense to give them to units that will never go beyond level 1.

I don't have a clear solution; maybe it's just a matter of making all city-defender units pre-designed (without haviing their gear upgrade with technology, only with city level : for instance, city level 2 defenders would have leather and spear, level 3 defenders would have leather and boar spear, level 4 chain and pike, etc.). Maybe a better solution would be to tie all city defenders to (tech-dependent) buildings that can be built in the town, so that a well defended city requires the sacrifice of a few turns. 

All in all, though, a redesign of the city defender system would be beneficial to the game. And since I've done it myself partially when I tried modding FE, I know that some of the solutions aren't too costly to implement.