Problem:
Currently basic cloth and cloaks are colored in the empires (or heroes/souvereigns) set of colors. Therefore, your first units show a large amount of faction color.
However upon upgrading to even the most basic armor those pieces no longer show an indication of the faction color. Therefore units of different kingdoms can not be easily identified. .
This is especially bad for heroes, because typically you care for the appearance of those guys, but after equipping some armour they all look similar and a part of their personality is lost.
Here is a screenshot of three different heros wearing the best gear i had available at that time:
As you see only the color of their cloacks is different. The one to the left is actually lady porcipinee which can not be identified as beeing female compared to her male companions. This (not beeing able to identify here as female) is, however, not to gamebreaking as only tarth has a number of female units.
Solution:
This could be remedied by two diffent approaches.
(a ) Add several kinds of tabard that can be combined with breast armour pieces. However we will then most probably experience more clipping issues as are already present with the current armor pieces. (E.g. shirt and wrist pieces clip etc.) If clipping would not be a problem this will be the preferred choice as it would allow a wide range of different looking combinations.
(b ) Add Armor pieces that are a combination of Actual armor and the tabard. because only one part of equipment is used clipping will not be a problem. However you would than have to offer at least four pieces of every type of armor. Eg. Heavy plate whith tabard (light); heavy plate with tabard (dark), heavy plate with tabard (twocolor) and heavy plate with tabard (flipped).
(c ) Rugged Cloth armor as found during quest could of could simply show item color.
(d ) Leather armor and also plate armor could furthermore have ornaments or inlays in faction color.
(e ) Shields should also have some faction color.
EDIT: Added suggestion c, d and e
