I don't think allowing more or more free troops or restricting magical troops is the answer.
I think the answer lies in expanding the content behind national (and independent?) troops. How about something like custom troops?
When you want to create a custom soldier, You get taken to a window where you start with a basic naked infantryman, cavalryman, or etc (no pictures
).
Then, you choose what sort of training you want, like militia, regular, elite, super-elite, and each higher option costs more gold.
Then you're taken to a window with your national weapons, like a glaive, pike, spear + tower shield, composite bow, and falchion + tower shield for Tien'Chi, and you pick a weapon, which costs either and/or resources.
Then, you're taken to another window where you pick your armor, like leather or scale, and you pick cuirass, hauberk, or full, with better armor costing more gold and/or resources.
Different nations will get different national weapons and armor, or troop types, and etc. Atlanteans would have something like "Atlantian" and "Shambler" instead of "infantry" and "cavalry"
This way, you can make "normal" Dom2 scale soldiers, or, for a lot more cash, you can make soldiers competitive with summoned enemies.
Another way to make national troops better would be to simply make better troops recruitable. Some factions have pretty pathetic selections of troops, often with redundant roles. When you've gotten down to it, few nations have more than two troop types. Maybe
just my two cents.