1: Conquered cities have huge Unrest penalties, so I usually raze them. That being said, attacking in the early game is probably the easiest way to win a game. There's no rule of thumb. My thumb tells me 9 - 12 cities are ideal.

2: One really strong and fast army works best for me. Try not to wage war on multiple opponents at once. If the AI does not put up a fight, you should probably increase the difficulty. 

3: Don't let your champs get injured. Like Borg said, there's a potion, but it's better to learn to pick your fights.

4: Never. I use summons and Binding if I play Resoln. Don't put heroes together if you want one to level up: they will split the available XP.

You can upgrade your units when the better tech becomes available. Petsonally I design my units to my preference to fill "roles" within battles. I reccomend you do the same. Also upgrading units cost resources and gildar depending what type of upgrade.

Use them to start a second stack or cast the steal spirit spell and be done with them.

I think one custom faction can dual weild, and there is one magic item that allows for it, but that's all.

There is an issue (bug) with keeping the boss monsters in the wildlands. They tends to wander off. I'm not sure if it's been fixed or not. In any case, once they leave their wildlands, it can't be cleared.

That's quite a bug, too bad.

Okay, last question, I hope: looking through encyclopedia, it seems that food/material resources are NOT gathered from tiles AROUND the city as in Civ games, if I understood correctly, but only from the tile the city has been built upon; am I wrong here? Please clarify someone. 

If that is the case, what prevents me from spawning couple of cities quite close to each other?

Just went through options when starting a new game, does not look like there is that option, although it doesn't matter that much.

What I'm more interested in...

1. Is it possible to limit number of cities allowed to be settled per faction, not counting conquered ones?

2. Is there a mod for something similar to that / did anyone bother playing in such way?

Just wondering if it's possible since I'd like somehow to emphasize the RPG part of the experience and limit late-on management regarding cities and stuff; would prefer if it was somehow possible to concentrate on battles/exploration more. 

I moved from CoS to Patchwork + Black Market Bazaar and so far it improved my experience in a way I really enjoy it more, although CoS is definitely a lovely addition, albeit problematic with plenty of (in my opinion) way too strong item drops.

Not as such; note that it would need to be tied to the size of the map, as you'd want to allow more cities on larger maps.  

However, there is a limiting factor with unrest, beyond which you need to build some unrest reduction structures (or use heroes to reduce unrest) to enable further (effective) expansion.  Unfortunately, the AI is poorly equipped to manage unrest, and it tends to out-expand its capacity.

In terms of modding, you could possibly do something with granting the faction's sovereign a limited, non-renewable resource and requiring it to build the faction's pioneer unit.  That way you'd only be able to build a set amount of pioneers, which in turn would limit city expansion.  A few caveats

• This would also prevent you from building outposts, unless you also modded in a separate outpost building unit (or gave them access to arcane monoliths).
• You can get pioneers from a few quests.  Unless you're farming quest maps, though, this is going to be a negligible factor.