Imagine the multiplayer game: two players attacking each other. One or the other lose the battle. After that: o no, let us try again!
That's irrelevant. In multiplayer, such an option would just need to be disabled. The ability to replay a battle that you auto-resolved is not a bad idea for single-player, IMO.
I agree with the apparent consensus that auto-resolve should be very good at winning with minimal casualties vs. significantly weaker opponents. Personally, I enjoy playing out big and/or tough battles myself. Autoresolve, on the other hand, is a wonderful tool for quickly getting through the small skirmishes where the outcome is a forgone conclusion.
The most comprehensive auto-resolve would be to have the AI control both sides, but run through it quickly in the background instead of showing it to the player. The downside is that it might result in a lot of waiting, especially for slower computers (which is when auto-resolve would probably be most-used).
There is no way, though, to make an autoresolve that will rival the actual player taking control. For one, everyone plays differently and there is no way of mimicking that. Secondly, players will always be better than AI so the only way to make auto-resolve give similar results would be to give the player a massive, cheating advantage in auto-resolved combat.
So yeah, IMO the auto-resolve should focus on winning with minimal losses in uneven combat, and just focus on winning whatever it takes otherwise.