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I looked at IllwinterGames other series game, Dominions 4 especially, and tried that out - wow, incredible depth! Takes a lot for master (something I havent, but Its alot of fun, even more so than Conquest of Elysium).
Finally, one other consideration which you hadn't noted is that by using Guards rather than Warriors (my preference) you lose a point of movement per turn.
My current run I'm up against a very powerful Pale One AI that expanded very rapidly and controls most of the map, but low difficulty so luckily for me they're rather stupid about how they use it. Pale ones tend to be bigger units so maybe that's why I'm noticing the difference.
Another thing to note is the relative cost of a unit of Arbalests (5) compared to 5 Outdoor Dwarves-30 Iron for the arbalests compared to 25 gold and 50 Iron for the Outdoor dwarves. Relative damage is 5d12 every third round compared to 5d8 every second.
True, I should've been more detailed about the whole guards upgrade concept. I did briefly go over it though.
"Keeping around 200/250 Outdoor Dwarves and the rest upgraded Guards (preferably the emerald "Armors of Dvalin" upgrade) is VERY effecient."
Let me know what you find is more effective. :) thanks for the comment
You also missed out the secondary part of gem upgrades which is the armor increase!