[Etaoin Shrdlu]

Admittedly, Spring and Autumn has a devil of a time just getting out of the blocks...
I'd suggest being active in the mercenary market while you still have the gold to do so early on.
Send Nobles out in pairs (or one and a merc crew), each with 5 Heavy Foot (Shield/spear), 10 archers, 10 Heavy Foot (glaive). If that's not working vs non-cavalry, send a third noble, put him on the wing with orders to Attack Archers (Nobles trample remember). This guy will often get into the Hall of Fame cheaply... with luck getting something like Valor or (even better) Awesome Presence (either of these means: there goes your low leadership problem). Battle Bellow is fun too, drop a Skull Standard, Horror Helmet on him and he'll even scare you...
Now that I've addressed the second question, I'll come back to the first... I much prefer Masters of the Five Elements to lead Heavenly Demons (do a search for Magic Duel to get an idea why). The Master of the Way is the more cost-effective researcher (but it's close). I might not even hire a CM until I have the gems to summon up a DHR/DHF pair per turn with spare capacity.
Other things I've thought of with this group: Make sure renaming is ON. Add a symbol on each CM and M5E showing where their randoms landed. Makes it really easy to figure out who to set to forging what. An M5E will automatically be able to cast the site-searching spell of his random pick (except Blood, but you so rarely have use for that). Use a B random to do the cursory first-level search (also to bootstrap production of Earth, Air, and Nature gems for the real searching)
Take a fairly high base dominion level so the Immortals will have some room to work with (and so your conventionals have a +1 morale to opponent's -1... can make or break a battle).
My preferred pretender here is an Oracle-- +2(!) pearls per turn means when it's time to stick Rings of Wizardry on people, you've got the raw material. (How else ya gonna make a guy with six 1s in his magical portfolio worthwhile?) You'll need the Oracle (built up at start to S6 or above) to start the process, but once you find a way to get a CM to S5, hand him a Dwarven Hammer and have some fun... or the Hammer of the Forge Lord and go nuts. Use Earth and Air gems to make Staffs of Elemental Mastery for your M5Es, they run the holder's Protection to ~15 to go with the 50% Shock Resist. An M5E with both of these items now shows (all elements) 3 N2 and either (another sorcery)2 or N3 or (some element)4... which is just one boost away from the Elemental Royals. Or picture this: D random goes to 2, Ring of Sorcery (3), Skull Staff (4), Skullface (5), Sceptre of Dark Regency replaces staff... (7, welcome Tartarians!) You're starting to get the idea that once you get going, you can throw such variety of raw stuff at the other nations that they simply have to make a choice of what to defend against... which means sooner or later they'll guess wrong. And you'll own them.
Of course, all this is assuming that there's a fairly high magic site frequency about. If not it gets really painful. And it assumes you survive long enough to get to all those gem-producing sites.