Should Heroes be Able to Take Armies Alone?
In my oipinion heroes should serve another goal in this game, than being a perfect substitute to armies.
In Total War heroes just give bonuses to armies and cities, and improve their skills based on the time spent in specific cities with specific buildings, or after a specific victory on the battlefield. IE a hero who spends time in a city with a law school could add a bonus to that city's security and can then be moved to another city to bring that bonus with him (good concept to develop heroes who are city managers). Note that negative bonuses are also applied to heroes who spend time in cities far away from the capital of their empire (some heroes become ignorant, or lazy...)
On the other hand a hero who is on a battlefield when a battle is won where most of his units are horsemen or whatever, may become a charismatic figure for those specific units in future battles and get all sort of bonuses when leading them... he also may find items lost by the enemy or get special skills etc...
Neither in Total War, nor in Age of Wonder can a hero be so powerful to take an army alone, their true function is ALWAYS only tactical!
I know this concept has somewhat been taken into consideration by the developers of FE, but IMO a good balance would be limiting a single unit's hit points in order to make it still too vulnerable to be just sent to autofight anything that shows up.
A very tough hero should still be a formidable foe, but please no supermen in this game! The fact that only heroes can retrieve arifacts and gold is indeed a very good bonus already.