I've seen Morale thrown around in a thread or two, was it cut as a stat?
I beleive the current thinking is to have that an army-wide stat, based on various factors (tide of battle, relations, etc.) and only applicable in battle, but it'd be pretty easy to make that a per-unit stat.
A whole "morale" thing about the tide of battle is good .. and it should affect the morale checks units would do when they see ding their friends.
Every units with a morale stat should make a roll when too much people die next to them and/or are breaking. The army-wide "morale" could be a bonus/malus to that roll. The discipline of a unit would be a bonus to that check. The "Will" would add a bonus only when the life of the unit is threatened.
What I liked about Medieval total war is the fact that breaking a piece of an army could get a "wave" effect where units near the breaking units would break and so on.