Thanks for all the work on the 0.86 beta patch. I think you are on the right track. The game is already a huge improvement over EWOM, but honestly I think still a lot of work has to be done to make it really good. It is still not very strategically challenging, and also lacks flavor. I have read a lot of nice suggestions about adding or changing things. I don't want to repeat those. Therefore, I focus on a few small tweaks, which I think are easy ways of fixing a few major problems of the game.
Selling items seems to be a dominant way of gaining money. This undermines strategy and immersion. Therefore, I was thinking of a way how to solve it. One way is forcing the player to sell items for eg mana or crystals instead of money. The latter could work for FE, but I think there is a more elegant solution. Make the shopkeeper have a real business. Therefore, he can run out of money. He earns money when you buy something and, he earns money in time as a function of the city's economic activity (Size, buildings, trade routes), and maybe the sold items. This can also be used as a way of making having a big city more powerful. Make him start poor.
City defense should be way stronger, and capital defense even more. The higher the city level, the better it should be. This helps the AI in not being a walk-over. Let the capital start with a fortress or something similar. More defensive structures are needed.
I have read that many people consider city management flawed, and I agree to some extent. I think one of the reasons cities are idle for a long time, is because many of the designed buildings are tied to city-level-ups. Therefore, there are way fewer selectable buildings than needed. I think many of those buildings need to become general buildings tied to some tech or just to city level. You could still use the level up mechanic in order to allow people to choose a few very special buildings, but structures like gardens, masons, bakeries should be free. Idle cities should produce something.
Hero leveling is already fun, but maybe it can be made a little less random (apart from balancing). For example, I think every spellcaster needs to be able to reach at least level 5 of one spell book if he/she invests in it. Therefore, I think it would help if at least one book of the highest level (when having at least two book levels) is guaranteed to show up in one of the next x level ups (having reached the required hero level). You could tie this ability to the path of the mage. Similar things can be done with the other traits btw.