The issue is still in flux I believe. I think that in future versions there will be an initiative system that will change the equation here.

Yes, I have meat shild types with lots of armor and daggers they absorb counteratacks.

You would think that a chop from an ax anywhere on your person, you're not coming home for dinner tonight!  Let alone have a counter attack thats worth anything.  But it is just a game.

Part of the problem with only using the highest level weapon is that everyone gets attacks based upon their movement, and not based upon the speed of the weapon. There are no real downsides for using the inherently more "slow" weaponry. Similarly, the "fast" weapons make you move faster? I don't walk more briskly when I'm carrying a knife than when I am carrying nothing.

If attacks used a % of your movement points rather than an integer value, you would see a much greater advantage to "fast weapons" over harder hitting ones. Fast weapons give you extra opportunities to deal a lesser level of damage. At this point in time, you already get pretty much 3 attacks on every unit out there, 4 if you have the right faction trait, more if you are riding a horse, etc. Similarly, it would be much easier to balance the really heavy hitting weapons. Make them slow, and use 75% of unit's total movement.

So, 4 Attacks at Str 9 (32 max damage potential) , or 5 Attacks at Str 5 (25 max damage potential)? Not really even a choice.

If you reduce that to 50% movement for a single attack or 33% movement for a single attack, the comparison becomes more attractive.

2 Attacks at Str 9 (18 max damage potential), or 3 attacks at Str 5 (15 max damage potential). This has more considerations. Are you fighting lightly armored things? That extra attack may be more worth your while.

Let's look at the super heavy weapons in this one as well;

Great Scimitar is 45 Attack, right? Ok, well that's a "slow" attack, so 1 chance to hit and do 45 damage. As compared to a broadsword where you get 2 attacks at 18 (36 max damage potential). That makes the big big weapons great for blowing a single unit's head out it's tookus every turn regardless of armor, where the weapons with less damage per strike give you the ability to attack several units a turn.

We don't. The number in the tooltip is the probability the opponent will hit you with his counterattack.

I do use a dagger amed troop has Tarth to burn up the enemys counter attacks. Befor the sovren moves in for the kill.

Not so. If you are fighting wolves you are dealing with some ~12 HP creatures. Strength plus spear in the two attack environment means you will most probably kill a wolf with both your attacks, maybe with a single one. The dagger has a good possibility of killing the wolf with two of the three attacks, leaving the third to be directed elsewhere.

Other possibilities;

High dodge opponents - More attacks is way better than higher damage because of the likelihood that the dodge totally negates ALL damage.

Enemies with tons of counterattacks - The dagger wins every time in my eyes, because over the course of several models, you will wind up getting more attacks with no repercussions, which in a war of attrition (any closely balanced fight with no sovereign) is a tactic to win.

Right now the biggest stick is the only real option because pretty much everything is the same "speed".

That one attack per turn assumes that you are using a heavy bunker-buster weapon, though. Most weapons under a %AP/Attack system would get two attacks, or the model could move a space and attack once.

I like initiative for combat in general, but more as an "activation order" based on dexterity and equipment. Dagger's only benefit being that they get to hit back more often is still pretty weak since you have to be attacked (and risk taking damage) for that benefit to have any effect at all. I would still got for increased effectiveness during my own turn (personally).

I agree. If nobody ever uses a thing, what it the purpose of having it in the game.

You can always factor it into the attack too, so the dagger gets X strikes before the enemy gets a chance to counter attack.

  The main advantage of it would be for characters rather than troops - the multiple counters would be useful for casters in both mitigating their usually lower attack value and providing a little bite in defence.

 For troops it'd be a niche weapon. I could see it being of benefit for a tank style unit (i.e. best armour you can get + shield + defence gear) who's job is basically to sit on the frontline and soak up attacks. You could do it now and still get some benefit from the dagger solely in terms of cost, but with multiple counter attacks it would also mitigate the lower attack value slightly.

Another possibility would be to allow the dagger wielder to counter attack before the enemy gets to attack, which equally could be a useful defensive measure. Although I think that ability might be better suited to the spear.