Simply because it was deemed too powerful. Entire armies could be wiped out easily with the right spell; now, spells inflict moderate damage, and you need an appropriately high intelligence to use most of the good ones. Magic is still very powerful, though, and very useful when outnumbered or against a superior opponent -- it's the perfect equalizer, and multipurpose, with a variety of functions. I prefer spells that aren't direct damage ones, most of the damage usually comes from units anyhow. Mana is better used on spells like Wind Shield or Confuse.
Now back on topic, I approve of this idea. Adventure is a major part of this game; hell, it even has its own spot in the tech tree. So why wouldn't we want to enhance the experience by adding more quests? Here's my two cents worth;
• A Demon residing at an evil temple offers a pact with you; if you accept, you must sacrifice an increasing number of your citizens to him each turn. In exchange the Demon will grant you the ability to use powerful Demonic magic; if you break the pact, you lose that ability, and the Demon may decide to attack you in retaliation, with power levels defined by how many citizens have been sacrificed to him so far.
