It seems to me that the combat model is broken. Tactical battles are way less fun than they should be, and often become walkovers very early in the game. There is no 'balance' between different units, and often the inferior troops will not just lose, they will melt without doing a single hit on the superior side.
I think is partly because the basic combat model is not doing a good enough job to simulate basic things like the effect of having more troops, weapon vs armor effects, etc. Something has to change; here are my suggestions, which are somewhat independent (you could do one but not the other).
1. Multiple men in a unit should multiply the damage linearly. In other words, if 1 guy has a 50% chance to hit, and does 2-4 damage, 5 guys should have 5 x 50% chance to hit, each doing 2-4 damage. I'm pretty sure that is not how it works right now. One guy with an attack of 10 is shown as Attack 10. 5 Guys with attack 10 should also be shown as Attack 10 (just with 5 guys, hence with 5 times the chance to hit). While this might result in multiple RND tests for each hit, I am confident that our PCs can handle the extra load. Use this consistent attack value against the defence, not some multiple of the attack value.
2. Limit damage by one weapon to one guy. As above, if a 'hit' is made, limit it to killing one guy, not inflicting more damage on the next guy. This gives numbers a real value. There could be exceptions made to this, for 'sweep' type abilities that large monsters and so on might have.
3. Change armor to a simpler model (and use hit locations). This is a big change to the combat model. Instead of adding up the defence values of greaves, shields, helmets, etc to give an overall defence value, simply allow a hit location for each hit on a target, Lower Leg, Upper Leg, Body, Arms, Head. Allow shields a 'save' chance depending on the type of weapon. Then the armor can simply have a defensive value against the weapon damage, for example Leather 1, Chain 3, Plate 5 (or whatever).
Under some circumstances, hits to certain areas might be more likely (defending a castle you might not need leg armor?, Mites might hit legs more often? Intelligent opponents might aim their critical hits at unarmored areas). Damage on the head would be doubled.
This is a serious change to make with a lot of work to balance, but ends up making a lot more sense than the current system, and is easier to understand. It makes a difference whether you armor your legs or your arms, depending on the weapons and enemies you come up against.
4. Whatever the combat system, reduce the power balance between weapons. Having some weapons do 4 damage and others doing 20 or more, is too big a power scale, and leads to highly unbalanced battles. The differences along the tech tree need to be more subtle (although this 'power scale' has to be balanced a little against the other elements of the tech tree, for example the magic paths, which also scale quite quickly).
5. Reduce the damage of the weapons (and the extra HP for levelling). Battles end too quickly and too easily. Especially with everyone being impulsive and mounted.
6. Fix and balance mounts. This has been discussed too much already, with no fix coming.
7. Bring back encumbrance and weight
Disclaimer: I like elements of the game, I have played for 300+ hours, I am a fan of SD and appreciate the work that has gone into this. I'm trying to be helpful