Now, v1.1 won't be some completely new game. It'll have a re-done UI in parts and the magic system is changed.
This is actually good to hear. I don't want Frogboy to think that the entire game is pure bunk. Most of the game is absolutely fantastic, it's just a few pieces that need some work. In other words, don't throw the baby out with the bathwater.
The way I see it, the two most important aspects that need to be fixed (other than performance) are:
1. AI. Seriously, if you just improved the Artificial Intelligence alone you would be killing a lot of birds with one stone. When I say, "AI", I mean for every game aspect: overworld factions/adventurers/monsters, and tactical battle AI. If you improve the AI, it will make battles more epic, it will make the economy more smooth, it will make diplomacy better, and it will make roaming monsters far more interesting.
2. Accessibility. This includes: improving the user interface and flow, writing more documentation (in the Elementalpedia especially), and possibly making the "campaign" much more of a tutorial than it already is. Seriously, one of the biggest complaints I see is people simply not understanding how things work, therefore they give up.
By the way, I haven't had much of a problem with the magic system in it's current state. I personally think that there could be more of a variety of spells, but I don't see it "broken" as some have claimed.