Damn cowards ... they flee like rabbits.

I don't understand how it is determined whether your troops rally successful or not. So far, my troops have rallied successful in most of the times. Does anybody know how the system works?

I'm just hazarding a guess here as I haven't played the games in many years but I believe it depends on closeness to the leader(s) and his/their ability.

That would make sense, but then in some occasions my troops would prefer a terminal rout over rallying, despite being only four hexagons away from Alexander the Great.

It depends ONLY on two things:

1) TQ of rallied unit (the more powerful unit the easier to rally)
2) Initiative of rallying commander (the better commander is rallying the better the chance).

I believe similar applies for healing (cohesion restoration), altough this one also suffers penalty if enemy unit is close by.

Conclustions:

1) dont bother rallying crappy unit with crappy comander
2) it is often good idea to sent your uber-commander to chase and rally valuable units