It's good we know you well enough that we know you're not being seriously serious.   I'm not sure if someone new on the forums saying what you did would have the same effect.

At the difficulty levels I've tried so far, game seems reasonably hard early but too easy late-game.  (If I tried max difficulty I don't think I would live to test late-game).

But I don't think strong champs are the problem. Do something to make the AIs stronger late-game (maybe monsters too).  Maybe just increase the chances of other factions having their own high-level champs and the smarts to use them effectively.  

Or maybe have some chance of a completely different random late-game crisis like devastating meteor strike or invasion by Cylons or something.  Something like the Mongol invasion is Medieval Total War 1.

I have been thinking based on this thread and came to a conclusion... Strategy and RPG are fundamentally opposed and cannot be fully mixed. The game is either going to be an RPG with strategy dressing for added fun (conquer nations), or strategy with RPG dressings (increase your unit numbers for extra fun).

If champion leveling is strong enough to be worthwhile, then it is strong enough to overrule the strategy aspect of the game.

Currently champions are so overpowering that there is no point in having anything BUT champions. This makes the game an RPG oblivion style only with worse graphics and bad combat where the strategy is merely faffing about... like cooking skill in skyrim. You can do it but it is only for immersion and is irrelevant.

If champions are made weak enough for it to become a strategy game, then champions would not be worth the investment.

MoM and age of wonders keep the sov off the battle casting spells in a domain, the champions are weak until the very latest portions of the game, by which point you won by breaking the game in several ways and its fun. The armies themselves can only level ~3 times before maxing out and are disposable (although it hurts to lose an experienced unit).

Lords of Magic, HoMM and Disciples are "strategy" where all city building funnels troops / support the leveling of your single stack of doom which is composed of a strong hero and strong armies.

Games like Kings Bounty are true top down RPGs where you lead armies, but you don't get to conquer the recruitment locations.

Those are three solid methods of blending and one of which should probably be used.

Healing quickly is not an issue within your own territory, in fact I encourage this mechanic because it makes defending easier. Healing quickly is not an issue within neutral territory, as all it does is slow down the rate at which you gain xp. There are much better ways to do this while still allowing armies to be active.

Healing quickly IS an issue within enemy territory. When you have 'just' conquered a city, it should not immediately flip to your territory (and give you bonuses to attack/defense), nor should your heal rate be so absurd as to be able to simply walk over to the next city and heal by the time you get there.

Disagree. The issue has nothing to do with "where" you heal so much as the disparity in power between units and champions.

I don't mind Champions healing quickly in friendly cities, particularly those with the useless healing advantage buildings. But healing outside a city should be disabled for champions and slowed down significantly for units. This also gives a boost to healing items and spells, which currently are under-utilized because of weak returns compared to just healing inbetween tactical combats at the regeneration rate.

Agree with OP, as well as

Currently champions are so overpowering that there is no point in having anything BUT champions.

champions will not be not meant to fight alone, but can play a support role in an army.

IMHO, the most interesting way to integrate champions into the strategy play would for them to support armies of regular units. But right now, even if you have 2 large armies with champs facing off against each other, within one round of battle there's only really champs standing.

However, as I see it the larger problem is this: currently, strategically speaking, war in FE is a lot like stabbing with a spear. Wherever that sharp point (read: champ stack) lands, you win, irrespective of what units they've built. The only defense is for their sharp point to meet your sharp point. The outcome of that single tactical battle then usually decides the rest of the game, and however well Brad programs the AI, my guess is that it's not going to ever be as good in tactical as a decent human player, both because of tactical combat itself, but also because it won't have built heroes so single-mindedly with the greater strategy in mind. For a number of reasons that people have outlined in great detail (levelling, healing, champs not dying), that single win translates into a win in the game.

One thing I haven't seen discussed though is how losing cities themselves contributes. So here goes:

What's the point in having cities/settlements (at least in 0.77)? Capturing shards. In my mind, that's it, the be-all and end-all. The only additional thing I would mention is that cities allow caravans which allow roads which enable better movement. That's also non-trivial.

So, early-game, to capture shards you need to expand your borders as fast as possible, which means teching up as fast as possible, which means you need population. Non-shard cities can contribute by increasing growth and tech. But once the map is settled, and all the shards are in someone's borders, cities become nothing but a means of keeping shards within your borders. In a game with better balance, they'd be unit-producers, and continued tech research would be useful, but here - as discussed - that's irrelevant: whether they produce units or not, those units are going to die before contributing.

Now, since it's champs and magic that rule the map, there's an additional snowball effect after that single spear-point vs. spear-point tactical battle: since you likely just took a city, and if you're smart you targeted one with a couple of shards, they've just lost 10-20% of their shards. Their champs' magic is now 10-20% weaker (less damage, less mana, etc..), and yours is commensurately stronger. Therefore, after that key tactical battle, their champ stack will never win against you again.

So, I would recommend that Stardock look at balancing champs and units better in an overall sense. Right now, as Taltamir notes, the RPG and strategy elements are too far apart. My early-mid game has two separate parts: champ stack running around levelling up, while my pioneers and city building happen somewhere else. Any units I take with my champs essentially become champ-like in that they gain so many HP they'll never die, but any I build and don't take adventuring are there to keep monsters off my outposts and that's it. There should be a reason that champs need to bring a real army with them, and there should be a compelling reason for some champs to spend time at home.

However, balance aside, for the current style of play, the one thing the AI needs to do better is to make sure they win that single tactical battle. That means planning everything from the start with that in mind, and using 'escape' to get out of any battle they're not at least 60% sure they'll win before it even starts.