I, too, am having a lot of fun with the game. Nearly 20h playtime clocked. The game is fun to play!
But, there are also some problems. No. 1 is that the AI doesn't seem to be that challenging on challenging. I believe major part of the problem is that I am able to play with no taxes, but the AI seems to be building too many units, and because of that it seems to need high tax rate and that leads to slow research and production. This seems to be at worst in the early game, the AI seems to do OK if I let it live to middle/late game.
Part of the reason for this is that I don't need troops in the early game. Settlements do not need any protection. It is rare to see a monster attack my cities and the AI will not do surprise attacks. Even if the monsters were to attack settlements, it would be impossible to protect the cities against higher level monsters in the early game. The AI on the other hand must protect its cities, as I am known to do dirty surprise attacks.
Maybe some amount of units should be wage-free? This way the AI could build some units but this would not destroy its economy. Another solution would be stronger militia in the early game. No need for as much protection.
The real problem might be in champions. There is a problem that has been there from day 1 of FE. Once you get your hero powerful enough, it will easily win most monsters, and this again makes your hero even more powerful. Repeat for a while and you have something that can solo most enemies. Path of the mage + focus + flame dart is an absolute killer combo. Add in flameball for large stacks of enemies. The AI doesn't seem to understand that it needs to rush powerful mages, just like it attacks archers, and it doesn't spread units when the enemy has AoE spells.
You can become insanely powerful with a melee hero, too.
Here the game mechanics are as follows: get some armor if at all possible. Optionally add in evade + stoneskin. Fortify + evade/blindness is a killer combo. But, all you really need is defense of around 10. Now you can solo many monsters which give a lot of XP (bears, trolls, ogres). And, when you get to around level 10, you will be able to fight the higher level stuff, too. The underlying problem here is that champions "scale exponentially" and this scaling isn't synchronized to the rest of the game. That is if you get some headway, you are able to get even more powerful, and with that power you can gain more power even faster. You don't need cities for this.
Some ideas to stop this would be limiting items and/or leveling of heroes to technology levels. This would lock the pacing of heroes to the pacing of the rest of the game. Some players might hate this, though. Still, having at least some of the magical items locked to magic research would IMO reduce the above problem a bit.
Another solution could be somehow requiring supporting units for the champion. Maybe make gaining XP from monsters harder by making the easy monsters give less XP, and by making sure it will be extremely difficult to solo the harder monsters. Maybe surrounded units should take severe punishment to defense? Monsters should come in larger groups. Now you need some shield bearers to the flanks of your hero, and thus it will be harder to solo the monsters.
I would also like to add more "accomplishment rewards" to the game. Powerful monster guarding gold mines and the best city locations would be fun.
In my opinion the higher level champions are a bit too expensive to recruit.
Last suggestion: make some/all of the quests available to single player only, or just do not remove the quest if the AI has already taken it. You usually do not get to play that many quests. The AI will try to play quests it is not able to complete, and even if the AI is able to complete the quests, it is still not fun that 3/4 of the map is completely devoid of anything interesting.
The city mechanics are IMO very good at the moment. Although maybe essence plays a bit too important role in the early game, inspiration, enchanted hammers and sovereign's call are really powerful in the start of the game. It is fun to quest in the world. The game is fun and very promising!
The save game at https://dl.dropbox.com/u/77548146/hero_overpower.EleSav should highlight the problem with heroes. Attack the slag, move your units back and cast focus + flame dart repeatedly. In the save game I have "cheated" by doing negative gildar building rushing, but the hero is still totally overpowered to the stage of the game.