I've never been much of a hardcore player. Never have been and likely never will. I don't play for score or to win (Both are just bonuses), only to relieve tension or distract myself. I don't have any intention of trying to get accustomed to more difficult levels, and am happy amusing myself with the already difficult "Beginner" difficulty (Of which I have yet to clear the second master. My current goal isn't to complete the campaign, but to meet Dorikos ^^
I'll work on finishing the game once I accomplish that, but I'm considering both a very long-term goal.)

On another note, does this Neutral-Hostile HP reduction apply to the AI as well? I mean, when they're goofing off in crypts and stuff do they get faced with 4HP Skellies too or will they still have 5 - 8 HP? Similarly the loot and exp modifiers... Do they get the same amount of exp as you do and the same odds at finding shiny things, or does that value remain constant throughout the difficulty levels?

Difficulty level affects AI as well, but it's reversed. Begginer is the hardest for them.

On lower you recive more exp from battles.

I tried to play the campaign on Master, but it was too difficult for me. Now I'm playing on Expert, and so far I'm successful - I'm not winning all games, but most of them.

The first battles are the most difficult ones. I'm getting Healers as soon as possible, they help to keep my units alive a lot, later after getting 3 Healer's Medals they heal units quite effectively. Keeping units alive is important, because after getting several levels they become much more useful.

I'm going back in time a lot though, so my score is always 0 :)

I'm playing at expert and I can win tiny shards, only one small so far. What I do is:

1st turn tavern, scout hero
2nd turn barbarians, I take a barbarian or free settlement province
3rd turn & on, I conquer only easy provinces that give enough money or that have resources, I don't conquer poor provinces. I make easy ruins like undead or orcs/goblins. With 4 barbarians I can make imp ruins (demons/demonologists), brigand ruins, for lizardmen I wait for 5 barbarians or so. When I have enough money I get the healer and use it to minimize losses/damage. Again with enough money I get a hero warrior. I also build something in the stronghold. Anyway I don't conquer many provinces at first, just the rich ones, and I don't rush towards the enemy, since he has always strong guards. I usually let him come, then I try to conquer a bottle-neck province and build an outpost. If you have some guards there, the hero will fight them and start the siege, then you can attack him and he cannot run away. If you think you can destroy his whole army without guards that weaken it before, it's better not to put a guard (the enemy hero will not make experience by killing your guard). In the meantime I use 1 hero for exploring and easy ruins (my warrior), my scout for harder ruins and enemy sieges.
I don't even try to go for his stronghold until I'm over lev 10 with good equipment (he has often adventurers as guard and they're rather tough).

For now my conclusions are:

1. barbarians are amazing (weak defense at first, but with a couple of medals they get 5), they can reach 16 strength or more with berserk at high levels.
2. healers are great
3. swordsmen/pikemen are also decent, but slow and inferior to barbarians, imho, swordsman have better armor but they do little damage and are slow. They are useful against bowmen and centaurs though. I'll try to mix them with barbarians, even if they get a morale penalty.
4. when warriors get more powerful and have decent armor&weapon, they're unstoppable against normal armies.

I've seen the AI attack and siege outposts before, but then run away while they're doing so...?
I guess I'm just missing something. =P

At least I *think* I've seen them do that. They'll kill my guards and I'll get a message saying that they're sieging a province, and when I get there, sometimes their hero will have run off and be a tile or two away but there won't be any fight or message saying the province was captured. Hm... I dunno. Maybe I wasn't paying attention and they did capture it, but I could have sworn they somtimes run off in the middle of a siege before I get there ^_^

They can cancel the siege at any point during their turn, but they can't chose retreat when your hero comes to kill them, so if they didn't pull back on their own (which they will do if they feel they lost too many troops killing the guards) you can nail them.

Ah that must be what they did then. Can I do that too? Sometimes I get wasted and only have my hero or a hero and a highly injured unit left after fighting off the castle guards and two heros, then just sit there because I think the fight is won only to find that the AI has a third or even fourth hero running about and get finished off by that when I *could* have canceled the siege and purchased some reinforcements from the province adjacent to it.

easy - just order him to go to one of your own provinces - and the siege is canceled

btw an outpost and mildly good guards are a good way to bleed an enemy try of his money - the guardsmen guards cost 350 gold and the enemy will have to recruit most of his troops again if he assaults them

For me the bigger the shard, the easier it is for me to conquer it. On tiny and small shards, I'm often attacked by the enemy early, and I'm often helpless - they can use province guards, but I can't defeat them or use mine, and their heroes are usually stronger than mine, because I must spend some time exploring provinces instead of fighting to wait for my units to heal when I don't have a healer yet.

But when there is a longer period of peace at the beginning of the game, I have time to build up my hero properly, which usually becomes good enough to defeat enemy heroes. I'm using different types of heroes, not the same on every shard, I only haven't used wizards so far, because I'm waiting for higher level spell buildings to be available. Warriors are good at "soloing", Scouts at eliminating the enemy units quickly (but their equipment breaks quickly, so I need to keep some spare bows and arrows in the backpack), and Commanders at having large and strong armies.

As for rank 1 units, I'm mostly using Swordsmen, Pikemen and Crossbowmen, plus one Healer. Sometimes I try to upgrade my starting Militiaman to Spearman, sometimes I keep using the starting Slinger for the entire game. Instead of charging at the enemy, I prefer "turtling", slow and defensive units like Swordsmen and Pikemen are good at it.

I think it's best to have only one combat hero, so he gets lots of XP. When I have a second hero, I use it only for province exploration (so the first one has lots of places to go), not for combat.

With the healer swordsman combo I am now doing better. But the fights in special places (dungeons) seem just as hard as conquering new provinces.

I touched upon this on a couple of other threads. I am having a tough time with the 'Beginner' level. I guess I need to develop a better stategy lol.