Also, three wizards? Gandalf, Saruman... and who? Galadriel doesn't count, she's a ring bearer (seperate thing), as well as being an elf (which Wizard's weren't -- they weren't human, elves, or dwarves, they were something else sent specifically to help deal with Sauron).
Did radagast show up? I'm not sure if he was only mentioned or actually took part.
the ghost army can be ignored since there seems to be a deficit of Narsils.
I almost woke up my roommate laughing, good one.
If you had armies that were largely composed of dragons, demons, and all sorts of other powerful creatures, then they'd just sit there and bang each other on the head the same way two lowly human soldiers would bang each other on the head. On the other hand, if most of the time the powerful fantasy creatures are fighting lowly infantry, then it actually does provide a much greater "fantasy" feel to me.
And now it's time for my infamous post invoking the conventions of scale in Egyptian heroic art (did this in demigod too, it's becoming something of a habit
. Gotta find some other relatively well-known art that employs similar conventions). You know how in Egyptian heroic art they threw the scale off and showed the heroes and the like as being way bigger than the average infantryman to symbolize their relative importance and skill? It only works if there's a lot of little guys swarming around their feet, because otherwise the effect of the one giant hero standing out from among the masses of lesser soldiers doesn't happen. The same is true here. Once you can raise an army of something, it feels a lot less special because it's filled the level of those little soldiers who establish the scale. If this continues all the way to the top, the effect is lost, and nothing feels special, it just becomes another army with cooler graphics.
If, instead, only the more basic troops can be naturally recruited and the most powerful things such as dragons are very rare and require a lot of effort to get, they maintain a huge impact on the player because all these factors make them stand out from the rest of the units. This lets them have the tremendous impact of the balrog, for example, when it comes out of the shadows at about 100 times the size of the numberless goblins. It's the most memorable part of the scene because of its size and that it kills gandalf, but also because it's the only one. It would immediately have lost the feeling of being special if the gates of mount doom had opened and about ten walked out.
I think SD's method of dealing with the dragons is absolutely spot on. It does everything in the right way to guarantee the impact of the dragons as individual and awesome creatures, not just the rough analog of an Abrams in Civ. I just hope they deal with the other fantastic creatures as well. For example, if griffons are rare, then having a unit mounted on them makes that unit feel tremendously special, unless everybody gets to ride a griffon, in which case they feel about as special as a horse.