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deryni: That is definitely not it but, from the screenshots and captions, it looks like the right idea for the gameplay.
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amok: yeah, reading how you described the gameplay, the first thing I thought was that it was a perfect fit for Chaos... as far as I know there was no DOS port, though, not even for the sequel. And it was way too early. Sounds like someone got some inspiration from here :)
Yeah, I can't believe there was no DOS version of Lord of Chaos, especially when DOS got Laser Squad!

http://www.mobygames.com/game/lords-of-chaos/screenshots
Not somehow this is it?