Yes the tactical combat definatly needs to be more tactical.
I like your ideas for initiative.
1. Initiative Check - Order in which units are activated, affected by presence of adjacent hero or lord.
2. Command Control Check- If this check fails the unit disobeys orders and automatically moves to attack nearest enemy unit.
3. Movement Orders Check - If this check fails the unit does not move this turn not having received its orders.
4. Morale Check - A morale check is made when an army has lost 50% or 75% of its strength. Units that fail this check panic and flee the battlefield unless rallied by a champion or a lord. So the question is - does the lord use his movement action to rally paniced troops or does he attack.
Initative check, and Morale check are good ideas. Command Control Check, and Movement Orders Check.... could get a bit annoying I think. Its possible to tie that into the Unit level system, and instead of having a check, change it to response speed. So a veteran unit will respond to orders quicker, than a non-verteran unit (instead of not at all).
Some of my suggestions for improving tactical combat....
Right now the game is pretty much "My stick is bigger than yours, I win." Which is fine, but why have tactical combat if you are very limited tacticaly?
The main reason for this is the weapon and unit design system. The tactical benefits of equipment is either too low, or non existent. Take the spear for example.... a weapon that was used for almost 400,000 years of human history because of its tactical advantage, is uselless after the early game.
The most important factors to choosing weapons now is damage, range, and cost.
My suggestion is to change the weapons system. Instead of just getting better weapons, you get a better class of weapon. The classes would be something like: spears, ranged weapons, swords, axes, and blunt weapons.
Secondly give each class of weapon a tactical bonus.
Spear: first strike, bonus versus calvary
Blunt weapons: bonus vs. armor and/or each attack reduces targets armor value by a certain amount in addition to doing damage
Swords: good blance between damage, and speed
Axes: High damage, low speed, and maybe have some bonus against shields
Ranged weapons: range (obiously)
Lastly, for very weak weapons like dagger that are USELESS!!! If you make a secondary weapon attribute for weak weapons, and then you can equip it to say.... your archers (ie units can have 1 primary weapon 1 secondary). These weapons are no longer useless, which makes designing units more important, and increases the tactical depth of the game.
2 handed vs 1 handed - right now the attack bonuse from 2 handed weapons far outweights the shield bonus form one handed weapons + shield (in my opinion) since if you are smart.... in most cases you can always hit the AI first.
Give additional bonus to the shield. Maybe something like % depending on shield size to avoid ranged attacks. I know that right now shields give a dodge bonus, but the benefits are marginal in my opinion. Also maybe give a special ability to shield carrying units, like shield wall. For a certain amount of action points you can increase the defense of a unit for 1 turn.
I mentioned earlier about having a secondary weapon. This can be used to make dual weapon units which would make both weak weapons, and one handed weapons more tactically important. Plus it might give some sort of bonus or special attack to units.
2) Horse/wargs.... no real tactical advantage. Only movement bonus, but movement per cost wise you can make infantry as fast as horsemen by adding extra equipment for almost the same cost.... tactically the difference is marginal (in my opinion)...
Add some bonuses/abilities to horses/wargs
Charge: mounted units do more damage to unmounted units
Harass: a special attack that allows mounted units to use all thier action points to do a non-counterable attack (counterd only by units with first strike ability) and retreat
Also you can make horse archers with long bows... first of all that`s ridiculous. If mounted units were only allowed use the short bows ----> short bow doesn`t become obsolete ---> unit design becomes more important ---> tactical depth increases
3) Some other tactical features
Gaurd - Shield carrying Units can protect adjacent units
Flank - Attacking a unit that is engaged with one of your units from the side or rear will increase damage