An update for patch 0.914:
The monster AI is fine, but the NPC AI is handing my ass to me (again, keep in mind I am very new to this genre). Just like in WoM, they are majorly out-playing me, even on Easy, and I don't know why.
This past game, I played as Altar on easy, and I routinely play a kingdom on easy (yes, that is Altar, the RED kingdom with BLUE zones of control... seriously, this makes trying to figure out if that nearby yellow city belongs with the yellow faction (it's really the green faction) way too difficult).
My general modus operandi is to research some early civics to boost my production and economy, and then one magic so I can build crystal foundries (IIRC). In the meantime, I am building city improvements to boost my economy, production, etc. while keeping an eye on my stores and input. My coffers usually do well at this point.
I am simultaneously using my sovereign and one champion, along with 1-2 squads of militia or spearmen to clear the surrounding areas of creatures and gather treasure. I equip what I can on my sovereign and champion, and sell the rest.
If I find an area rich in metal or crystals I will send a pioneer to build a new city or an outpost.
After exploring for 15-20 minutes, I eventually run into another kingdom or empire. Without fail, their number in the upper-right (forget what it's called) is always at least 5, but more often 10 points higher than mine (say, 20 to my 12).
They start threatening me shorty thereafter, so I begin researching warfare.
Within 30 minutes or so their numbers are now significantly higher than mine (say 30 to my 14). They declare war on me while I run into another empire/kingdom.
The second NPC's numbers are higher than both mine and the original NPC kingdom/empire I encountered (say 38, 31, and my 16). Within 10-20 minutes, they too have declared war on me, even if they are a like-minded kingdom that was "close" to me just a few minutes ago.
Both NPC groups harass/destroy my outposts and weaker cities and then finally invade and crush me a short period of time thereafter.
On the WoM boards, the only advice I received was "spam research," but that destroyed me then as well.
I know it is likely I am making significant mistakes, but feel the easy setting should not routinely kick my ass this hard in one hour (seriously, I have yet to win a game, or even conquer more than one NPC kingdom/empire).
Even if I am "playing the game wrong," it does seem amiss that an easy setting will always kick my ass. Because this was observed with WoM, I am deeply concerned there is something very anti-noob about the game. Even if I am a terrible player ever at this game, should I not routinely get so horribly destroyed on easy?
For your first point, you have smart player colors on. This is an option that changes the color to reflect their relation to you (which has its uses - but not always needed), if you want the faction's natural color, turn it off in the options.
As for your play style... I'm honestly not sure where you are going wrong, your 1-4, maybe even 5 sounds okay (I do pretty much the same thing even on hard). Let me put together a quick list of things that I do, and maybe it'll be of help:
On turn 1:
Ctrl+N if you get a 3/2 start. The problem isn't so much the grain, but the mat, you need at least 3 to get production in a manageable manner. 4/3 is what I would consider an "average" start (so if you take a 2 mat, you essentially lose 33% production - a pretty huge handicap). 5/3 and 4/4 are great starts. Always take 4/3 over 5/2 (the 5 grain takes too long to pay off - while the 2 mat handicap affects you immediately). 4/4 over 5/3 depends more on taste and needs.
Set taxes to zero. This makes your production and research go up. It doesn't generate much at the start anyways. Early on, you'll survive with a slight negative income using what you start with, and loot you sell.
Cast Inspiration on your city. This improves research. Choose the first "Civics" tech (for that prestige and rushing), to help your city grow faster.
Build a workshop (fairly cheap and makes all later production go faster).
Hire the nearby hero. He/she will be an extra scout, I tend to make them into governors and have them sit around doing nothing later on.
Very Early game:
Walk around looting freebie lairs and explore surrounding area, you want to know your general surrounding landscape and see if there are any potential expansion nearby. Kill weak mobs, and things you know you can take on. Moving up gradually as you gain better equips and levels. If you run into something a bit more dangerous nearby, just avoid it. But if you have to get rid of them, merge the two heroes and use your hireling as fodder, toss some spells on if you can. If it's even more dangerous, lure it back to your city and use the militia as fodder too.
In this stage I generally build more infrastructure buildings, Tower of Dominion is a good one, and then Lumbermill if available (I usually place my city where it is), but if not, sage. Research wise, I go for 2 more civic tech (knowledge and then agriculture) to get the first food tech and granary (an essential building). Then I usually go with shard harvesting (usually time it with a pioneer) and Training (for spear).
Build 1-2 spearmen and use that to help your sovereign clear the surrounding areas, while building pioneers as necessary to claim land and expand, build the granary as well, of course. The other hero should continue to be a scout. Focus research back into civic. If you play on challenging or lower, you have a good chance at the Merchantcross Bazaar with my growth strategy, which will fund most of your early army, but on hard or above, forget it, it's a loss cause. You'll instead try to get economics as fast as possible for Farmer's market. You might need to adjust your tax a bit in between if you don't have enough stuff to sell, but it's usually not too bad unless your starting hero took everything you had. After that, you can do whatever you want.
You need to decide right away what you want to do with said faction, don't let them decide it for you (this is important). If they are of a different alignment, chances are high that you'll want to get rid of them sooner or later. If they are the same, a pact or two and they'll be happy to be in your coattails unless you become too weak in their eyes (which you should never be). To prepare for war, research logistics (this part may change in next patch) and get a spearmen group or two... combine that with a bit of tactical strategy/spells usage and you should be able to march on their capitol. Once that falls, take any other good city they have, then demand their surrender (for the extra prestige their sovereign gives). The game is now a cakewalk.