The darkness does benefit me a lot, it's just that I've focused on Ulmish territory mostly since it's closer to my own near the places I feel are most important(my capital region where most of my summoners are). This means I'm sending around 6 Armies of the Dead each turn(600 longdead usually) to his various provinces. Often one army is enough to take one province. If I had to use conventional troops or use the spell in daylight, the results would be far worse, since ulmish troops are far superior to my own in every conceivable way. It'd also mean that even if the armies of the dead succeeded, it'd be much easier to retake the provinces. My mages are pretty good against his guys on the other hand, but if you guys had income, you'd have more mages too.
And the darkness doesn't necessarily put me to zero. My upkeep is less than 800 more than my income, but I often get lucky events(since I have a positive luck scale), and due to my high amount of provinces, it's not that rare that I actually gain 1000 gold on some turns. And I sometimes pillage provinces to squeeze some cash out of them, usually the once I capture with the longdead. Though I mostly use the money to build temples. It's crazy how strong the old ermorian dominion is, it's still the strongest on the planet despite me having almost all of his old territory for myself for dozens of turns.
And I'd be interested in seeing the results of those battles, since it seems there'll be some very interesting ones in the next turn or the one after that. Don't be so quick to surrender, if those battles go terribly for me, you might have a much better chance.
Regardless, it's been a fine game. You'd have fared a lot better, I think, if you had used the long range province conquering spells. Then again, your supply of death mages is pretty poor, and they're mostly death spells. I think there's one for Air though, and nature, but I'm not sure how well they'll work in the darkness, since my PD has darkvision too.