Is there more unit diversity, perhaps link to racial choice in some way?
Very little. They added some mildly interesting units and equipment options specific to certain races, but most of that is either not very useful or only useful near the beginning or middle of the game, late game there is still a best armor and best weapons used by all the races. There is some other racial diversity that's a little more exciting related to spells or city improvements, but as far as units go it's still quite bleh. There is a pretty big mod that adds a bunch of really interesting races, but even in that you still have the same best armor and weapons that late game units will be using.
In the same vein as the above comment, heroes/champions/etc did not have much diversity, either. They had an activated ability and/or you could make them a channeler that just cast the same spells as your character. There were also no items that aided your character's magic ability and there was no penalty or opportunity cost for just throwing the most powerful armor on all of your heroes.
Is the hero system more diverse and interesting?
They actually did a really good job with sovereigns and champions, all of your concerns have been addressed. There's basically 5 different classes now that are fairly distinct, and some expensive champions are multi-classed. Heavy armor is pretty much only going to go on warriors or defenders, because it's too heavy for the other classes to use effectively for the most part, there's lots of spell caster gear, and also a fair amount of dodge/crit gear for the assassin class. There's even a governor class that doesn't get much in the way of combat abilities but is good at supporting cities or other units.
I felt that the magic system, while having great mechanics, was not an integral part of the game. It was very hard to build and maintain a good mana base and you could not maintain a dacent amount of buffs or be a casting-oriented player. Even if you focused all of your resources on it, it really did not stand up to just building mundane units. In fact, you could win the game just fine without casting a single spell or using any magic at all.
Is magic a more integral part of the game now in terms of viability and use? Have the machanics of the magic system been changed or is it fundamentally the same?
You can still succeed without using spells, but focusing on magic is also very viable. Mana is easy to get, especially if you play with dense shards, and caster sovereigns can throw powerful spells around every battle.
I very much liked the technology and research system in this game. I was also a big fan of the city building and resource gathering/managing mechanics.
Have these aspects changed significantly?
Very much so. Cities are much smaller, only about a dozen buildings each that upgrade, plus a half dozen or so world wonders. The tech system has also been cut down quite a bit. There's only three tabs now, civic, combat, and magic, and everything has been tightened up into much fewer techs displayed in trees.
