Hi All,
First of all i have to say that for me this is a great game, this is one of those games that "just one more turn" turns into an sleepless night.
So these are my thoughts on the game so far, please remember that this are just Ideas or Alternatives so If you like any of these be my guess and improve them. I'm looking forward to play the final version of this game 
Magic System Problems:
I think the actual magic system is not enough and not balance enough, if you go with fire magic get fireball, improve your hero initiative you can basically destroy any non-hero unit on the first round, units are pointless in most cases.
Mana Pool becomes meaningless when you control several crystals
On epic paced games since tech evolves too slow but your hero's levels grows fast and magic is not limited by technology you can basically control everything with just magic.
Magic System Alternatives
Crystals can be a resource like materials and be used to train special abilities on units
Spells can be research individually so in epic paced games they grows along side technology
Units can be train with spells that have been researched this will allow more dynamics on unit creation, you will be able to train white wizards, clerics, support mages, etc. Crystals can be used to research spells from an specific school and units will be train using these crystals as well. For Example: Create a unit that wears no armor with heal spell, shrink or a unit with heavy armor with fireball. This will reduce the dependency on hero's for magic, and since each faction will control different type of crystals each faction fight strategy will be different.
There should be more support spells, like spells to create barricades to protect archers or protects from cavalry or other magic users
Each unit should have its own mana, and like any other RPG mana can be based on Intelligence or Willpower.
Magic damage should be balance so magic units are equally important as melee or archers.
Combat System Problems:
Seem too simple straightforward and not much of a challenge.
Combat System Alternative:
Bigger Terrains
Defensive side can place its units before combat so they are not "In position to be burned by a Fireball"
Terrain bonus, penalties
Units can be conceivable on forest, behind walls... assassins can performed back stabs, units can be flanked etc.
Castle/Town invasions can be more like a siege, with walls to break.
Heros Problems:
You already know...
Hero Solution Alternative:
Magic items not so common on the wolrd
On level up, features should be based on the path selected. (Don't know if they are right now, but does not feel like it)
Heroes shouldn't be that much more powerful than normal units but insted they should work as leaders for the armies providing bonuses depending on their path
There could be a leadership stat, that can be used to determine the size of the army and create another stat for the leadership weight of each unit. For example a Hero with 10 Leadership can create a party with another hero with a leadership weight of 5 and two swordsman units with a leadership weight of 2.5 each. Heroes of higher level will required more leadership. *Leadership weight = Amount of leadership needed (Couldn't find a better name
)
Research Problems:
I think research tree is important and fun, thats what makes factions diffrent. But i think the current tech tree is too small.
Research System Alternatives:
Research tree should be bigger and wider, that means that it would be hard for a certain faction to have it all and instead take a path for what it works best for they play style. This would make the game diffrent with each replay.
A faction can specialize on mounted units and long range attacks, another on magic or diplomacy. Etc.
AI Problem:
This is one of the most common issues on this type of games, and one of the most disappointing. When you chose Challenge or Hard or Insane difficulty for an empire you expect that they will play smarter but instead they are just handicap to have more gold, research faster etc. But this is not better AI.
AI Alternative:
Increasing difficulty shouldn't increase resources on factions... or not that much. Instead they should play better.
City Management Problems :
Its too easy to increase the size of your territory
With a bunch of overpowered Heroes you can just move and capture enemy cities and forget about management. Captured cities will provide everything you need and since AI cities grows faster they are better option than build them yourself.
City Management Alternatives:
There should be a penalization(Economic, Unrest) for each city on control, this way expansion will have its drawbacks. Players would have to stop from expanding and work on economics and city management before continue with their expansion.
Recent capture cities should not provide full bonus
Thanks guys for reading and sorry for the typos or bad spelling, english is not my primary language 