When I did my undead faction for Children of Storm, I calculated that if the cities were filled with living people there would be more bodies than you would ever need. This would be my go-to approach for fixing the DLC as well. Population would essentially create corpses (global resource) over time, that you get to store until used up for units. The special improvements would be redefined as "famous graveyards", making people living in the wilds go there for their own burial needs (and then you collect the corpses).

I believe you could also make a mechanic where 5-10% of the corpses stored rot away each turn. Obviously you don't want the player to be able to store up too many corpses and then create a massive army instantly. If the corpses rot away this would promote building up your army over time. It would also be possible to make it so that created units require "upkeep" corpses as they would need to be replaced every now and then (they have no wages).

The faction would also start with say 100 corpses.

Both these mechanics would be really easy for the AI to use, and would scale with higher AI difficulty.

I should add that modding the DLC faction would be difficult to do though. Because we can't just take the DLC, pack it up and re-release it as a mod with a different flavour. We'd be giving the DLC away.

In B&M on top of small growth bonuses 1/1.5/2 added to the grave improvements I am playing round with two spells. Death Plague which kills 1/8 of the population in a city for 50 mana and grants you one Soul resource, and Grave Theft which boosts the population in a city by 20 for 1 Soul. These two spells give the Undead a unique way to gain population that fits their theme of harvesting corpses. Also I added an improvement called the Overgrown Graveyard which can be built on all food tiles. Right now it spawns a special unit but I might change it to grant +1 growth in the nearest city. I'm also thinking that in order to round them out and make graves less shallow I could add a special Town only improvement that grants growth for Undead to replace all the ones they can't build.

Sounds like DSRaider and I had the same ideas r.e. Wild Grain and Wild Game.  I went with Spooky Farmhouse though.  I.E. that place where unwary young folk go 'cuz they seek advanture, a secluded place to take a love interest to, or whatever, only to find Jason the Butcherman lies in waiting for them... -1 group of young folk lacking common sense/turn, +1 Growth.

@Perigrine

The problem is not when a human controls them. It is when the AI controls them that they fare very poorly.