Something was bothering me about the tactical combats - and today I finally figured it out:
In essence the combats boiled down to "whoever strikes first wins". My sovereign has been roaming the countryside killing everything left and right without taking a single scratch. That 20 Attack, 5 HP guy? Killed him with my 10 Attack, 10 HP Sovereign - sure he'd have turned me into minced meat if he hit me, but I hit him first and he died without resistance.
So my suggestion is that the other unit hits back before damage is dealt - e.g. I hit him for 6, he hits me for 9, damage is dealt - he's dead and I'm at 1 (I got lucky) This way you no longer can mow down entire hordes of enemies with a "Uber" unit with a extremely high attack and high speed - without taking a scratch.
To summarize:
System now:
1) Attacker hits
2) Defender takes damage
3) If Defender still alive: Defender Retailates
4) If Defender still alive: Attacker takes Damage
New System:
1) Attacker hits
2) Defender retaliates
3) Attacker and Defender take damage