There are PLENTY of ways to balance Horses in a variety of directions... 

Most of them are good too! 

But if I had my magic wand....

1. Decrease the Spawn rate of horses and wargs to .1-.25 a turn. (Galactic Hunter's Idea!) 

Horses are hard to find and raise, which is why resource poor countries (such as Nordic kingdoms) often had to rely on Infantry to defend themselves, while Mongols had plenty of land to raise grazing Horses.  

2. Horses and Wargs add a 4.0, 2.0 Wage upkeep per turn. 

The problem of Horses aren't in battle.... I mean, who wouldn't want to be on top of a thousand pound beast that could crush a man's skull with his front hoof? With good training, Horses ARE the original **ing Dragon! Unless of course, you know how to wield a pike... which is NOT a spear!  

The real problem of Horses is that they are thousand pound beasts that need to be taken care of... which for a medieval society, is QUITE different then taking care of a toy dog. 

To represent this difficulty, Horses should be lubriciously expensive, forcing the player to have a broad, slow, cheap infantry based army, and a quick and powerful, but pricey and slow, "Four-legged" Tank Army.

3. Horses and Wargs should be able to attack  

To truly represent the fear of Calvary, Horses should have a basic attack, equivalent to an attack by a Club. The speed of Horses is great for Mongolian Pasture warriors, but the REAL reason Western Knights used them was for their Strength rather then their maneuverability, because when Barded, most peasants didn't have the strength to actually harm the beast, let alone kill it! 

I think the prone avoidance is probably because they would need a new animation. 

Well I disagree with giving them additional initiative. That makes them faster at everything, including shooting bows. How does that make sense?

I think reducing the horse/warg income further and increasing the production/upkeep dramatically are the best solutions, as that would balance out the benefits of mobility and buffs mounted troops already represent. If you can afford it, sure, mounted troops are superior. But on a cost/production scale, you could pump out and maintain three infantry for the cost of one cavalry. This keeps them from completely replacing the infantry aspect of the game with minimal impact on re-balancing combat.

The problem is the Excel-table approach to game design, making horses "just another resource like stone or gold" which ultimately does not work.

Why? Because you can store heaps of gold or iron indefinitely in some sort of vault, you can accumulate it and stockpile it. 

Horses, however, require constant supply of food where they compete with regular food production. The limiting factor in both human and domesticated animal population was always the available land. Some land is arable and therefore suitable for settlements, some grows only grass or shrubs and is therefore better for sheep/horses and nations practicing nomadic way of life. Nomads and horses are intertwined, because when the cattle/horses eat all the grass, the whole community must move to new pastures. Also, mobility is more important to them. 

All in all, the amount of arable/fertile land a nation occupies should present a certain maximum supportable human/animal population. Horses should require both food and materials (human care, training) to maintain. They should be viewed as an expensive luxury, especially trained warhorses that require great deal of patience to breed and train (you cannot ride just any horse to battle, y'know).

In battle, horses should be subject to certain unique routing effects representing the mounts panicking and just running away. It happened historically when faced camels, elephants, fire, etc. Fantastic creatures like dragons should frighten horses. 

There is really no reason why riders should have missile dodge ability. A rider is also a larger target, and while it's able to ride faster, allowing the archer smaller time window for losing arrows, it's really much more exposed to missiles than a footsoldier, as battles like Agincourt, Crechy and battles against Mongols proved. 

Cavalry really has the important advantage of tactical initiative, being able to pick the time to attack and withdraw at will, and being able to lure units depending on combined arms out of position. Traditionally, flanking and harassing of support units was important, but since combat in FE is just a brawl where troops start few steps apart, there is really no way to represent this properly. 

Advantage of polearms as anticavalry weapons should be implemented somehow. For cavalry units to be interesting, they must have momentum implemented in some way, otherwise they are just faster regular units. 

just to chime in on the whole pike argument..... People who watched braveheart are big believers in the spear / pike vs horses.  In reality, it wasn't quite so awesome.  Horse mounted troops *decimated* the non mounted variety.   2000 lbs of monster breaks people.  Period.  (yes, warhorses were typically what we would call a "draft" stock variety these days, and commonly run 1850-2300 lbs.  Not the 800 lb variety you see at the track)

A long stick with a pointy end, set into the ground allowed foot soldiers a HOPE against these troops.  But it wasn't like the guy with the stick had better odds than the guy with the horse. He just wasn't quite as bad off as the guy with the sword or axe.... who was totally screwed.

Talk to your history professor, not just look at a few movies and traditional wargame rules.   Horses made armies horrifying before rifles.

I don't want to be prickly, but you may be underestimating my reading and knowledge of cavalry warfare. It isn't entirely from watching Braveheart

Hussites: 

http://upload.wikimedia.org/wikipedia/commons/5/53/Josef_Mathauser_-_Bitva_u_Lipan_roku_1434.jpg

They crushed several crusades with mostly infantry versus the finest knights from whole Europe

Swiss armored pikemen:

http://0-media-cdn.foolz.us/ffuuka/board/tg/image/1336/93/1336937170375.jpg

The Popes chose them as their guard for a reason. They absolutely dominated in their time.

And of course Landsknecht armies who copied their tactics.

Yes, armored knights dominated during their period against poorly trained levies and light infantry, but professional armies that started to appear in the 15th century with the rise of the power of cities and city states proved to be more than a challenge for them. Might wanna consult with your history professor. 

Yeah, there's no drawback to horses, that's just poor balance.

I'd like to see beastlords be able to beguile mounted units with their ability.  Or a spell that makes mounts panic and move randomly.

I'm in agreement with the horse glut issue, it would make the game more interesting if they were rarer, so only an elite minority of an army could be mounted.

I'm trying a game with scarce resources, to see if that helps ... but early on I've already come across 2 horse fields. \

I was trying to gather race-specific traits in this thread, but sadly no one seemed to have many ideas for it! I am really in favor of increasing the number of traits available for unit design. It will really help to distinguish different unit types further, and really make you specialize that unit for what you want it to do.

I also can't imagine that it would be that hard to implement - I haven't really done much modding, but I'm at the point where I'm ready to delve into the .xml files and introduce them myself, if possible.

This is something I wanted to see implemented. I always thought that all this charge "attack bonus" business could be avoided by simply giving cavalry a damage bonus based on how far they moved before they attacked the enemy unit - maybe +1 attack for every tile traversed, provided of course that they didn't start their turn in an enemy's ZoC. This might encourage players to maneuver their cavalry around the battlefield in this way, providing this "momentum" bonus that you would expect from charging cavalry.

Also, many of these ideas and other great ones were discussed in this thread, if anyone is interested.

Not to hijack the thread, but yes, I have. I am more interested in trained unit traits, though, but now I am working on a trait mod for trained units myself.