I agree with the sentiment here, so much that I may be repeating some things already mentioned.
First, why does there have to be a static balance at all points in the game?
Let me answer this first. Why does there have to be balance at all points in the game? Because Heroing and Conquering are both tech trees. If heroing is only useful at the beginning of the game, there should be no tech tree for it and all heroes should be removed after turn 100. Equal investment = Equal reward. The two should be equal, if not necessarily the same.
However, before continuing, I have to say that if Elemental is as you say, common sense took one look and jumped headlong out the window. You're saying that one guy - one, single, guy, can:
1: Guard a whole town by himself.
2: Conquer a town. Again, by himself.
3: Prevent said town from simply revolting and reaffirming its former allegiance.... Again, by himself.
And this isn't even a heroic guy. This is a level 1 swordguy who for some unbelievable reason can do all that?
This is absurd.
I fully agree with the idea of using squads entirely, and no it isn't unreasonable.
This is post-apocalyptic, and therefore populations must start (for the minimal amount of incest) at about 100 people.
For a single squad of warriors - the absolute minimum of which should be about 10, this consumes around 10% of your starting population (so let's pretend that it was 110, because I'm lazy and it's easy) . Two squads in exchange for a lower starting population would give 90 population in exchange for two squads of guys. So at maximum, your starting army of guys is conquering populations ten times its size, not a hundred times.
Midgame can have twenty units to a squad, and with a late game squad, this can go up to, say, 50 people each. Note the progression is not ten times as is the current 1 > 4 > 10, but exactly half that. The default attack rate should be 1 per, and 2 for the end game, so attacks increase from 10 (1 each), to 100 (2 each and size 50).
This makes a lot more sense already. When the population increases, army and squad size must also increase, though not proportionally as larger populations become comparitively harder to mobilise against invaders. You need an army to conquer a city. One man units are not armies, they're don't even constitute an organised militia.
Secondly, however, I'd argue that the same logic applies to a hero. How does one person keep control in a town? Sure, the hero might be able to kill a bunch of them, but if even one in ten hurt him, he's dead. A lone hero should not be able to retain control of a town. In fact, unless units were actively left in a town for several (ten?) turns (during which time the town is "occupied" rather than "captured") the ownership should immediately revert to the previous owners - Would you remain loyal to your conqueror without any conquerors around? Occupied towns shouldn't be able to create units themselves either - a military squad is loyal. If it's not, you just armed the people who are fighting against you.
This leads to the idea of "presence". A hero hasn't got much military presence. He's just a guy. He might be able to raid a town for loot (but not much, since he has to carry it himself), but he's not going to be able to conquer it; even if he did, he'd have to stay put for ten turns. This seriously limits any potential for hero-rushing with a super-sovereign, whilst rewarding players with specialised "police" units who have more presence to let them control large cities easier. Armies can't complete a quest without a hero, why should a hero be able to conquer a city without an army?
As an aside here - I hope sovereign "level" to be a settable game option. I'd get more satisfaction from levelling up an initially weak, low level sovereign into the all powerful demi-god than having him at some arbitrarily high level from the get-go only to fall behind more useful heroes later on. Sovereign combat should be high-risk/high-reward in my mind.
I also agree that, for starters, every unit must be handled as an individual. Early discussions waaaay back talked about a squad of swordsmen against a dragon - one hundred soldiers can't beat a dragon, neither could a thousand. This makes sense. Just because there's a thousand swords doesn't mean any of the people behind them can hurt a dragon. Has this approach been forgotten?
So an elite group of knights isn't a 1500 attack, 800 defence, 1000 HP army of fifty. It's 50 x 30 attacks, times 2 each (or 3, though that many attacks on a basic unit with normal guys is fairly ridiculous). And every attack is against one unit of the group, with only sixteen defence, though - unlike MoM - this doesn't have to all hit the same unit each time, but the one with the most health (making the unit overall longer lasting with spreading damage). Sidenote: Special unit ability that allows them to target the most injured unit instead of the least would be potentially very powerful.
To compete a hero who starts out at, say, 12 attack, 6 defence, 8 HP and 1 attack - about three times more powerful than a regular unit - only needs to increase at a comparatively small rate - 60 attack, 45 defence, 60 HP, 10 attacks at max level without gear.
The key for lone units I see to be number of attacks, just 60 attack makes even an unarmed hero inherently dangerous all by themself, even though it's a smaller increase over nine levels (starting at level 1 up to 10) compared to a military unit, but with ten attacks as well, he's a unit all by himself.
On its own, this isn't going to cut it against multiple squads of high-end units, but a hero shouldn't be balanced with just stats alone, but with special abilities plus stats, a max level hero should pose a high threat to any unit in the game, even dragons, whose high def/attack is better against the death-of-a-thousand cuts that a military unit offers.
One such ability, Magic, is great for heroes that have it, but magic should be only one of many special talents heroes have, so the special abilities are another must-have.
Finally, cohorts is a great idea - but I think it's so powerful better as a skill rather than by default. Cohorts themselves don't even need to be particularly powerful to provide a large amount of security for the hero whilst the hero does all the damage. A hero with the appropriate ability naturally accumulates a cohort with a size equal to their level - 1. This even gives the hero a little presence for holding territory.
A lesser cohort options would be an equippable "pet" or partner which basically serves as a single additional unit to share damage with.
Combining this all together makes heroes adequately powerful alone, at a broadly consistent (but not necessarily even) level of advancement (thanks primarily to the number of attacks they get) compared to squads they might meet over the course of a game. But even if they could take on entire stacks of squads (and the law of averages still doesn't work too well in their favour there), they wouldn't be able to hold anything and any invasion led by a hero would lose units to hold the territory every town they conquered.
It's nice to see such cohesive thinking going on about this.