There are certain limitations to the game engine atm - your perceived 'stupidity overload' is the result of, sorry to says that, your ignorance towards them:
1) Commanders do what they are ordered to - literally. They do not 'think about' what might be your intentions. The only freedom of choice is what spell to use when ordered to 'cast'. In that case, the AI will mostly go for buff (target:self) spells first. If there are targets in range, the battle engine will try out several different ranged spells and choose the one which deals the most damage. That does not mean it will do maxed damage, or any damage at all, because the random factors are newly calculated when the spell is actually cast.
2) Units do not 'know' about battlefield hazards. They move into poison clouds as well as into a breath of winter. Likewise, units do not 'know' about their own auras/fields.
Ok, another quick test:
A mage who is ordered to "cast spells", but can cast
absolutely no spell defaults to "stay behind troops" it seems. (E.g. Blood-1 mage without slaves and low research - only spell would be 'bleed' which requires a slave).
"sometimes cast BoW THEN run to where it can inflict the most casualties"
Obviously, the only spell the mage could cast at that time was BoW. As he was ordered to cast, he did just that. Afterwards, he was ordered (by the game engine) to "stay behind troops" - and he did just that.
"sometimes run to position first, THEN cast BoW"
Behaviour like that I couldn't recreate unless I ordered the mage to move via "attack" order. If ordered to cast a specific spell 4x and then cast spells, the mage always stays put until running completely out of spells. In that case, he casts "BoW" first and moves on the next turn.
Exception might be heroically quick or quickened mages. The additional action points screw up the order of orders (if that makes sense).
"to where it can inflict the most casualties on their own side"
As unit do not know about auras, fields, units around them (other than who is 'rearmost', 'nearest', 'archer' etc), they can't deliberatly run where they can cause the most casualties. They go for the rearmost unit. Simply make sure your rearmost unit is 100% cold-resistant and keeps a healthy distance from the rest of your troops and you'll be fine. If you bunch up all your vulnerable mages, either by setup or use of "stay behind troops", the 'stupidity overload' is surely not on the games side
Admittedly, there are some possibilities for improvement with the battle engine as well as with the game engine in general
