Altar, as the hero faction, should have a building ala the HOMM3 tavern... or perhaps an option at city level up would be a hero instead of one building choice.  So you get 4 buildings and a single hero to choose from.

ALL basic techs for all factions should be available at the start of the game and the tech tree should reflect increases in quality and ease of production of basic items. 

Basic weapons, mounts, shields, padded armor etc should be available.  After you research cavalry or horse archers you can create units with unique traits that can be added at unit design.  i.e. charge for cavalry and skirmish (kiting) for horse archers.

Once that is done, give each faction a few unique techs that only they can use:

Umber gets skath mounts with a venomous bite attack.  Wyvern scouts can reveal much of the map once the Rookery is built in a city.

Tarth gets invisible armies in forested terrain and snipers in forest tiles in tactical maps. Can only outfit heroes with metal armor, as they detest being underground. (or metal armor for troop designs is triple the normal cost if you like)

Tarthan Druids can summon creatures of the forest to aid a stack in battle and high level heroes can call upon the trees themselves.

Kraxis outposts also spawn militia and have a catapult on the tactical map if attacked.

Capitar gets a black market building that gives limited access to other factions unique hero items and will rarely present you with a new free tech or magic spell.  Occ. you might lose a tech to another faction. (no honor among thieves)

Resolyn's priests can raise enemy dead to augment their armies, with enough mana and necromantic research, undead drakes, ogres and hoarder spiders can be created. 

Yithril gets a knockback troop trait to reflect their fearsome physical abilities.  But are -3 to dodge from ranged attacks w/o researching better armor types.

Sure is fun painting the fence... anyone else wanna try?

Capitar should also be approached frequently by mercs seeking employment... being all wealthy and soft

Another faction could have the ability to bribe such units away... I don't know the backstory well enough to know which... what do you guys think?

I like this idea, those numbers may be a little high though. I especially like the negative trait. Capitar could then have special mercenary units with the experienced trait. This would allow them to keep the amount of units they have to a minimum to maximize gold, but then if they go to war they could suddenly buy large amounts of troops.

The key here is balance. It is important that races do play different from each other but they don't always play the same.

Good ideas.  And I agree with Tasnuke, Kraxis makes sense as the nation to have a network of spies.  

I would like to see each race have access to unique spells. Sovereigns of other races could access these race specific spells only through research.

Example 01. "Umber - The Beast and Horde Team"

Umbar has access to summoning spells that allow them to summon wolves and dire wolves.

• Level 1 - Summon Wolf - single wolf
• Level 2 - Summon Wolf Pack - Group of wolves
• Level 3 - Summon Dire Wolf - single dire wolf
• Level 4 - Summon Diree Wolf Pack - Group of dire wolves
• Level 5 - Summon Wolf Horde - summons 10 packs of wolves and 1 pack of dire wolves

Other Sovereigns could access these spells by researching Summoning Magic

Example 02. "Tarthans - They are isolationists who use the land to their advantage"

• Level 1 - Tree shield (All friendly units adjacent to a forest tile receive +20 dodge bonus vs missle attacks)
• Level 2 - Trip Vines (each turn all enemy Units lose 1 movement unless they resist, except in desert terrain)
• Level 4 - Mass Invisibility (All friendly units are invisible until they attack - 150 mana)

Other sovereigns could access these spells by researching Nature Magic.