Sorry in advance, a little wall of text.
Initiative isn't so clear atm... affecting footsoldiers, mages, archers and mounted troops in strange ways and generally being rather hard to compare... +5 initiative? what does it do? 5 more turns? no, perhaps it gives you 1 and 1/4 turns compared to 1 before. Generally you need a bit of trial and error in a few battles before you can work it out (i'm not sure of values) perhaps the mouseover giving you a breakdown of turns per absolute game time... So default initiative would read 1 action/turn and if you can get generic equipment increasing it to 3+ actions/turn then something has gone wrong... in a fun way but still wrong. Anyway, I would like the following:
Initiative - renamed physical stamina. Needs a dependent variable (or even just a mouseover) measured in actions/turn. So say if your character had 50 initiative it would read Physical stamina 50, 1 actions/turn. If you had 25 physical stamina, 0.5 actions per turn. 100 physical stamina, 2 actions/turn. Using turn here to represent 20s/1 min/5min/1h... whatever a default turn is... of tactical battle fantasy time 
Each weapon that has -ve initiative causes a cumilative fatigue penalty. Fatigue could cause problems when it reaches key levels (50,75,100% of stamina value) effects of this being decreased ability to dodge, to hit and eventually (at >100% stamina) movement speed reductions and significantly increased chance of being knocked prone. Ending turns without actions should return a small amount of fatigue to simulate resting and recovering/collecting/retreiving stray arrows/rocks, while each turn of absolute game time would remove a small amount of fatigue from all units (1/10th stamina? or just -5 fatigue). Trolls and powerful creatures should regenerate stamina/remove fatigue faster (1/5th stamina per turn) allowing them to use heavy weapons like boulders without much rest (rather than: having a higher base initiative/stamina and moving faster, accruing penalties from using really heavy items and being nerfed, or worse them being given massive stat boosts to compensate for the heavy equipment causing them to do massive damage because of the link to strength)
Knife- low fatigue cost
Club- high fatigue cost
Short bow- low fatigue cost
Thrown boulders- high fatigue cost
Cloth shirt- no fatigue cost
leather- low per item
Plate- high per item
Mental stamina - as with initiative above casting spells should have a cost in terms of mental stamina. A minor fire attack should have a low casting time (5 seconds fantasy time - practically instant) while having a modest drain in mental stamina... so that although you may have a stupidly high initiative and have say 10 turns before the opponent, you would quickly wear yourself out and require several turns of rest unless you had a massive int. If you instead casted a fireball it would take much longer in game time (2 absolute game turns) and a higher mental stamina cost. The result would be that physically and mentally slower casters would simply throw all their effort into intermittent powerful spells while a more mentally agile caster would fling dozens of smaller attacks at key targets. Some spells would be unable to be cast if their cost is greater than your mental capacity, others would simply leave the caster so far above their limit that they would be defenceless for a few resting turns afterwards.
Another point here, mental stamina could be used for default, non-mana using magic attacks... as such they would cost more in mental stamina than those using mana. Higher int would give more shots per battle and be useful with both magic champions and magic units.
So the result would be a militia with no armour and a stick
50 initiative
1 action/turn
+5 fatigue per attack (stick)
can fight effectively forever +5 fatigue per action, 1 action per turn recovering 50/10 fatigue per turn
Surprisingly agile unarmoured, sticky hero
80 initiative
8/5 actions/turn
+5 fatigue per attack
5x8/5 = 8 fatigue per turn - 80/10 per turn = effectively fight forever
Add armour though and you quickly get bogged down:
militia as above with leather:
+5 fatigue (stick) +5 (set of leather armour)
becomes 50% fatigued after 5 turns of attacks 100% after 10 turns
With platemail:
+5 fatigue (stick) +25 (5x5 platemail)
becomes 50% fatigued after 2 attacks, really struggles in long fights against agile foes
Hero with leather:
10 fatigue x 8/5 attacks = 16 fatigue per turn, -8 per turn = +8 per turn, 50% fatigued after 5 turns
General effect... after half an hour of fighting soldiers and faster moving heros are just as tired... if instead everyone recovers a set x amount per turn rather than based on initiative then the hero would end with +11 fatigue per turn and become >50% fatigued on the 4th turn rather than 5th. This is probably more realistic as the increased initiative has allowed more attacks and the increased stamina has allowed more fatigue to accrue before causing an effect, even if it causes a problem sooner.
About mages:
Low int high strength mages (i'm thinking a brute sov.) would be able to cast only a few spell before suffering mentally, perhaps not even 2 non-mana shots if equipped with a staff, so start the battle with a big fireball (you're holding a mace so non-mana attacks aren't an option) then abandon magic and wade into melee. (with >100% mental capacity penalty to spell damage/penetration/resistance that isn't too important since you're punching and kicking now)
high int mages could fight without dipping into the mana pool due to their mental reserves and magic staves or could use mana to cast lots of small spells or a continual albeit intermittent stream of fireballs, 1 every 3 turns for as long as mana permits. Different staves could have different default attacks (healing staves restoring both health + removing physical fatigue, slave mages/blood slaves restoring a target mages mental capacity... etc)
General points:
Initiative/physical stamina and how it could work in long battles with low damage where kiting by high initiative troops is the problem
If you only end turn and don't fight what you're holding shouldn't make a difference (it does currently)
If you attack repeatedly (even via counterattacks) then you should be tired (you aren't currently)
If you have regenerative powers you should be able to use more powerful and heavier equipment (currently it heals missing limbs mid battle, holding a club rather than a dagger is still a big effort though)
If you fire several volleys of ranged attacks and now the enemy is at your feet you should struggle to uproot and run away. In this case you'd be fatigued and have a movement penalty, have a penalty to dodge and be more likely to be struck down rather than currently. (where you wouldn't have fired yet)
Splitting physical and mental traits apart.
If you cast spells you shouldn't move more slowly (currently you do staff vs. dagger)
If you're low int you should have fewer magic attacks, higher int being more (does int do anything currently?)
If you use up your magic you should still be able to have a go in melee... just suffer due to your frailty and general lack of strength... unless you're a big brute.
If you mix both physical and magical attacks you should gain some benefit to contrast the lack of specialisation. In this case you'd be able to stay under the 50% thresholds for physical and mental fatigue for much longer (depending on equipment... heavy armour would increase the rate at which you tire both physically and mentally. Mentally as it requires more mental effort to cast without gesticulating.
Contrast to that, if you specialise magically you should benefit - more attacks, more damage, less mental fatigue and more accuracy/dodge. Use cloth armour and you should have some benefit as a mage over full chainmail or else why are there so many sets of robes around? who is wearing them and why?