I wasn't exactly sure how to word the title, but by AOE, I mean the default by which damage accumulates against each figure in a unit, and rolls over to the next figure once a figure dies.
I think the game would be well served by removing this functionality. If anyone remembers, that's exactly how MoM worked. On the flip side, units could have abilities (similar, but not to replace, the current overpower ability) to allow them to wipe out more than one figure per attack. Call it Trample, or Cleave, or whatever.
The advantage of this sort of arrangement would be that Heroes, and "mega" units in general, would be more specialized. A 50+ attack hero could kill a dragon, but still be overwhelmed by a horde of spear men. This would require many of the epic in-game monsters to receive the ability to overpower/trample.
With this relatively small mechanic change, many balance issues would be resolved immediately. The hero stack of doom would be substantially nerfed, and although it would be possible to cobble together a stack of doom, it would require special items or abilities. On the flip side, the synergy between heroes and armies will be substantially improved; in general, a couple/handful of heroes supporting standard units will be superior to a stack of doom.
This will also result in a substantial boost to the currently ultra-week horde type units, like hordes of spiders, or even hordes of spear men. Suddenly, the ability to put out an large army of conscripts with poor weapons becomes viable, because they simply won't be able to be killed by anything other than large numbers of other units, magic, or "special" heroes/monsters.
It also introduces new strategic possibilities. I can imagine an axe that requires crystal which can be used to provide the "trample" ability, but it would be very expense. The possibility of smaller units with this special "axe" versus large hordes of conscripts becomes interesting. Also, a normal army would be well served by bringing a mage to do crowd control of large hordes of units. Assassin/paladin style heroes would battle the dragon/titan/whatever, while the mage would blast the hordes of spiders/shrills/whatevers.
It would be necessary to control the number of items/abilities that would confer cleave/trample type abilities, as this would reduce the strategic implications of these capabilities. I would suggest that one of the empires could even potentially receive this ability by default, which the stronger magic-type nations would have a very rare chance to have this ability, and should have to rely on magic in some form to wipe out large groups.
Thoughts? Anyone know if it is possible to mod this capability in? I haven't looked at modding FE extensively yet, but if it is a simple flag that needs to be replicated in a bunch of files I'd be happy to sit down and do the work.