I have played a few games in Hard, and I am trying ridiculous right now (with various variations of a fire/death or fire/life sovereign). Here is my feedback about the game :

 Balance

Regular vs heroes

This one is well known, and documented on Frogboy's diary, so no need to speed much time about it. There are various ways to fix it : 

1) Make it harder to get high levels : the starting progression is good, but after a few level ups (around lvl 7 I would say), leveling up becomes a cakewalk: many fight XP rewards are too high compared to their difficulties. Once XP will be divided, it should somewhat address the issue, but it will create other issues (there won't be enough monsters to get to high level, most champions will become liability, and we'll end up with 1 uber sovereign + 1 or 2 uber champions, and nothing else.

 1b) Give more XP to regulars : there is no reason they get half XP from fight, especially since they have a much harder time surviving these fights.

 1c) Rebalance the troop upgrade cost. It is totally insane as it is now. It is maybe 20 times too high for anyone willing to do it ... A better way to do this would be to have a retrain option, like in Master of Orion 2, where you can spend production points on troop upgrade.  

Maybe give better troop options from the beginning, like leather + spear, and add another armor/weapon tier later (like meteoritic armor and weapons, or adamantium, or whatever you want to call it : Heroes are able to find such items in various crates from the beginning anyway: it is not civilization, I don't need to have my troops start with clubs and sticks... having medieval stuff from the beginning would work better from a thematic point of view IMO (on a totally balance unrelated note, it would be better if the wonder were magical/mythical buildings : it should be a golem factory, not a boring great mill for instance. It's a conflict between wizzards after all).

Maybe give more building allowing troops to start with higher XP, or make the troop training buildings give more XP/season. 

2) Make AOE spells much less powerfull : A single Fireball or curse of ??? should not obliterate an army in one single cast : either reduce the area of effect, or the damage .

Single attack spells seem much worse from a damage/mana point of view than AOE spells. 

I don't think reducing Heroes' HP would achieve much : it would destroy the heroes vs monster balance, which seems pretty correct to me so far, and heroes vs regulars would not be such a joke if AOEs were not able to obliterate an army so easily and for a ridiculous mana cost to add insult to injury. 

Starting positions

Many starting positions are crap, and some are too good (heroes + ressources nearby, good starting spot...). It would be better to have the starting spot be of consistent quality, but with varied ressources and hero type available.

 Anyway, I think letting the heroes be on the map adds many issues for little benefit : it adds too much variance (as having a few competent champions early is critical), plus they are prone to stupid death before recruitment (when a wandering monster or opposed faction AI walks on them), making it even more random. I much prefer having them pop up in the capital to offer their services, or even better, have most of them be recruitable by quest (except for the first 1 near the starting spot).  The added benefit would be that it would be much easier to control the number of heroes each player can have.

Traits and attributes

 Many traits are crappy (most of the +3 in one stat traits are, and the whole governor tree is), which is a shame: instead of having an agonizing decision between skills that would work under different circumstances, we end up with a no brainer for most level ups (as the stupid +3 INT, +3 DEX,... keep repoping way to often).

Dexterity is horrible atm. It would be somewhat more useful if it had an effect on initiative. 

Int and spell mastery are weird : spell mastery is critical for the debuf spells, and useless for the nuke spells (which are the ones people use the most anyway, as AOE nukes are just that, nuclear weapons). 

UI

The UI is a bit clunky :

There should be no need to hit produce on the build screen after having clicked on a building : it should be added to the queue immediately.

There should be an easy way to destroy a building from the city screen, without having to look for it on the map. 

I would like being able to see the whole squares elligible for settling without needing to build a settler (so that I now which parts of the map need to be cleared first).

Edit : There definitely needs to be something done when the player is going several turns in a row without research : either prompt him every turn, or pick a random tech or something. 

Battles and AI

I cannot comment on the strategic AI given it has an insane amount of ressource advantage in ridiculous, but the tactical AI seems pretty poor: the spellcasting seems random at best (except for the poor old sovereign who insists on casting obscuring mist). And it doesn't use direct damage spells enough (but it may have to do with almost all of them being in the fire school, which is a bit overdone IMO). But the worst part is the target selection and movement : the AI usually doesn't move when it is in contact with a target, even when there are much better potential targets in movement range (a near death champion 2 squares away for instance). But if it did focus fire, it would be too hard to make a champion survive because of the way attacks and movements are handled :

it is pretty easy to disengage from melee (no autoattack, and you are only blocked if you try to enter another square in the ZOC of an opposing unit), and even without letting one of your units be encircled, with diagonal attacks, it is possible to land 3 attacks on a single target.

I think it would work much better if diagonal attacks were not possible at all (as I don't see the game moving to hexagons). That would make it much easier to protect one of your units if you do not screw up, without having to count on the AI being particularly retarded.

On the other hand, it is almost impossible to screen an unit from archers fire : they can fire even when in melee, (they should be limited to attacking their meleing opponent with a malus IMO), and do not seem affected by range (maybe I have it wrong though, but I didn't notice any difference), or units inbetween.

Protecting your key units is much easier in Age of Wonders for instance, despite the AI not following weird target priorities (it seems to like to kill regulars first, then focus on champions, then on sovereign, but the first priority is usually not to move from the current spot).

Variety 

I think the game could do with more content : more quests, and more decisions in quests (not just take it or leave it), more items with varied effects... I find the adventuring part of the game is much more satsifying than its "civilization" part right now. 

Overall, I find the game much more entertaining than its predecessor , but I think there is still a lot of work to do in the balancing and UI departments.