I've been in the beta from the beginning, although I'll admit I haven't played much until recently because I've been insufficiently pain tolerant and the zooming bug for smooth-scrolling mice makes playing difficult.
Anyway, the magic system is one of the things being worked on at present, and I certainly feel it needs work. To foster and encourage this conversation, I wanted to summarize the current system as I understand it, both so that my misunderstandings can be corrected and so that we can all make suggestions from a common base of understanding. Some things in this summary may be wrong at first, so please correct me and don't take anything I say here as gospel.
As I understand it, there are currently the following types of magical resources:
Essence: used for rare and powerful spells, initially only the sovereign/channeler has essence. This resource does not replenish once spent, although you can gain more by. Can be spent to convert land of the opposite alignment to your alignment. Can be spent to allow heroes to cast magic. Imbued heroes start with essence of their own, based on their intelligence when imbued. Initial sovereign essence is equal to their intellect.
Intelligence: determines caster essence and maximum mana
Wisdom: determines sovereign maximum spell points.
Mana: used for casting ordinary magical spells. Maximum points determined by caster essence. Regeneration rate determined by ???
Enchantment slots: a finite number of enchantment-type spells that can be controlled at once. Equal to caster intellect.
Spell points: the number of points you have to spend researching new magical spells from books you have already researched. Spells are learned on a per kingdom, not per caster, basis. Separate from research points, different from mana. You cannot research a spell if the spell point cost of learning it is greater than your spell point maximum. Regeneration determined by buildings in cities. Maximum determined by ???(sovereign wisdom)
Elemental shards: resources on the map you must control to use certain spells. Four varieties (earth, air, fire, ice), despite the occasion references I see to them in the forums, I've never encountered life or death shards and do not believe they exist.
Research points: the points used for all research types. Produced by buildings and some NPC. Can be used to research new magic books, but not the spells within them. Can be used to research the creation of magical objects and buildings.