I have been playing a bunch at the higher difficulty levels and have some feedback on how damage spells don't scale like everything else.
One of the biggest differences at higher difficulty levels is more hit points. However mana is a very difficult to get resource still so although fireball and lightning bolt and ice storm etc are reasonable strategies at easier difficulty levels they are very weak when you triple everyone's health (or more).
On the second highest difficulty I ran into 4 stacks of 9 units, each unit had around 350 hps. So 27x350 hps total (around 10k hps). all in one square. A few squares further I ran into another 10k hp megastack. Fortunately I was playing a sword and shield fighter so I was able to cut through them all but if I was playing a damage wizard I think I would have had a lot more trouble. The computer had stack after stack like this.
Buffs and debuffs are cheap and scale reasonably well but pure damage spells suffer a lot in these situations.
I think it would be better if you increased defenses (dodge, Magic resist, armor) and DPS instead of just health.
Another reason health is not fun is because it is very boring to slog through these fights (my opponents had 10000 faction strength to my 60).
Higher damage output instead of higher health would make the fights faster but still very hard. Probably harder.
I was able to beat second highest difficulty consistently with sword and shield characters but not damage casters. On the highest difficulty I have only just started but the problem is even worse of course.
In general I think damage spell casters are just a bit weak. They are still viable because most of the difficulties are not hard and everything is viable but I would either nurf hero armor/weapons or buff hero spells. Probably the nerf is better since it brings heroes closer to units in power level that way.
There are 4 basic strategies that people usually mix but all 4 should be reasonably equal in strength so people can have fun doing all 4.
1. Melee hero
2. Damage caster hero
3. Unit builder
4. Melee hero that buffs or debuffs with magic
I think all 4 of these are fine at all difficulties except number 2 gets weaker and weaker in relation to the others because of health scaling.
TLDR version:
Reduce the cost of damage spells across the board, they feel about 15% too high.
At higher difficulty don't scale health so much, scale health some, but scale dps too to make the fights faster and help damage casters.
Mike D.