Overall, I love the way tactical combat works in LH. I think that both armies starting closer to each other and being thrown straight into deadly combat is a fun way to play a battle out. I do have a few objections, though, not specifically to wolves (their initiative IS a bit high and they can slaughter an early army with ease, but I can cope), but to the starting layouts, which, as many above have pointed out, are completely random.
I have often had a single hero start out in the midst of a group of high-initiative enemies with my other units oddly far away, too far away to actually get there in time to save my hero. Even if you were given a bunch of random starting places and allowed to choose which units went where, rather than full choice over where everybody goes, it would make combat a bit less "you die before you go" sort of thing.
Mind you, it's pretty good as is.