First off, I find the equipment in FE much better balanced than in WoM.  But, there is still a big flaw and hurdle to the game balancing.  This has to do with having 2 different game mechanics of how units work.  Those two groups are stacked units (like 3, 5, 7, or 9 soldier stacks or monsters) and single hero/monster units.  One big problem is they use the same equipment, for the most part.  Heroes do have access to some rare and powerful magical gear, but if anything, this just makes the system more imbalanced.

The first step in making this work, and I have mentioned several times over the years, is to make Stacked units be, in reality one unit.  If we stop trying to balance two different systems with each other, we can begin to balance everything else, from spells, special abilities, level ups, hp etc.