I approve of the low experience for fighting AI; killing AIs is its own award, i.e. that's how you win the game, and with high XP there would be too much of a steamroller effect.
Only one of the victory conditions requires killing AI units.
This is far from the first game of this type, and in all the similar games I can think of AI units give normal (if not higher) exp, and in many of those games a normal unit that gains levels actually gets stronger while in LH they only gain more health. Civ5 for example, barbarian exp caps out early, you have to fight the AI for exp, and that exp can turn your units into 2-3x as powerful monster units capable of attacking multiple times per turn and healing rapidly.
It should be balanced around the fact that it works both ways, if you aren't careful and sure of victory then an offensive loss could mean a couple extra levels for the defending enemy army and the death of units you've cultivated for many turns of gameplay. I've found in these types of games using enemy AI units as food for you powerful units actually creates a scenario quite the opposite of a steamroller. You end up with fewer high power units that you are much more careful with, things slow down and you become less able to handle enemy zerg attacks on multiple fronts.
I think if there is any balance concern a simple change would be all that's necessary. Have a unit's wages increase by like 10% per level. I think this change is already necessary, wages are currently pretty meaningless especially if you focus on fewer high power units which is already an easy and valid tactic by farming endless monster spawns. An elite and highly experienced unit should cost a lot more than a unit fresh out of the training yard.