[Agema]

Raid their provinces with thugs, deprive them of gold, Arco will slow down to a crawl. Utgard's army is pretty middling: those giants might look fearsome but they're not that great all in all.

You don't need to summon thugs, you have three already. Least recommended is the Gode, the Jarl is okay, Skratti is awesome. Turn the Skratti into a Werewolf (Change shape on stratmap orders, DON'T do it as army orders). Lots of ways to make Skratti thugs work, but a classic would be Shroud of the Battle Saint plus weapon plus shield. I recommend frost brand and vine shield. That build relies on not being hit (high Def, Vine Shield) as protection is not great: don't send it up against things like heavy cavalry alone (multiple attacks and high damage) as it can readily die. BF orders: Cast quicken self, hold one or two turns, Attack.

All your thugs can be accompanied by Seithkonas - Seithkona should be on the same square as the thug and cast Body Ethereal. Skratti can risk hvy cav and so on when ethereal. Note you'll want your Seithkona to then leave the battlefield or otherwise find a safe place (like behind a bodyguard) so she's not attacked. In larger battles thugs can be accompanied by a bodyguard as well to act as a bit of chaff.

Note all those thugs have unexceptional MR. Amulets of MR recommended especially for astral-heavy opponents like Arco. If you've got air boots somehow, great, your thugs can now go pretty much anywhere. A Seithkona with your thug will also make mind hunts risky.

I think Construction 4 is your first urgent stop so you can equip thugs. I'm not thrilled by Utgard mid-level magic mostly, but later on you've got some great options with big Nature and Astral buffs like Mass Protection, Mass Regeneration, BF Luck, etc.