1. Interesting, how did it break the game though? All I did back in 0.86 was make the troops early game have worthless attack, and accuracy, while not touching their health. This made them excellent fodder, and costed only 0.1 gildar per week.
Downside of them is that, an army of them... can't even take on a single group of Militia.
So to me, it is fairly balanced.
2. I thought about that. What about this:
Every Traits the units can unlock, have a Positive, and a Negative, which partially cancels each other out, but are of different aspects. Essentially Specialization traits.
i.e.:
A. City Warfare: +25% attack and defence when fighting for or against a city. -25% initiative, attack, and defence when not.
B. Forest Warfare: +25% initiative, and attack when fighting in forest terrain. -25% defense and initiative when not.
C. Dragon Slayers: +50% attack and defence when fighting against dragons. -25% initiative when not, -5 gildar per turn.
etc