Right now, tactical battles are not terribly interesting. They suffer in comparison to older games such as AOW or even HOMM. 

The following things would greatly improve them:

1. Terrain. There should be some meaningful terrain tiles, which affect movement and combat. Streams, swamps, forests, hills, etc. What is a tactical war-game without terrain? Not to mention the whole 'no forts' issue in sieges. A game that did this quite well was/is Battles of Wesnoth, where every race/unit had different stats for each type of terrain. 

2. Weapon and Armor combos. There are different types of weapons (piercing, blunt, etc) and different types of armor. There could be more armor types (scale, steel plate, iron plate, segmented, etc. with different effects on different types of weapons. Also, shields should have a major impact on ranges weapons. More ranged weapons (x-bows, slings, etc).

3. Weapon ranges. Ranged weapons should have limited range, depending on the type. Also, ranged troops that get closed on should be forced to fire at the troops next to them, and be disadvantaged or forced to use their melee weapons instead. That way a proper screen would be required.

4. Move and shoot should generally not be allowed. Move OR shoot OR cast.

5. Dynamically generated terrain based on the strategic map would be ideal.

6. Some sense of formation would start to make it feel more like a tactical battle game. Bonuses for secure flanks, outnumbering / outflanking enemies, etc

7. Morale would be nice. In warfare, the moral is to the physical as 3 is to 1 (according to Napoleon). 

What else can we do (simply if possible) to make the tactical battles more interesting?