Personally, I'd like encumbrance back. Improve it, make it more gradual, have more impact but definitely back.
Honestly, whatever we may think, I would assume at this point, since they have taken away encumbrance, and it seems to be part of their plan to do so, that its not going to come back.
I've been thinking this myself. Armor pieces are fun in some games, but I'm starting to think they're not necessary or fun in LH. And like you mentioned they could balance the initiative much easier with full suits, and maybe introduce a couple more armor types just for fun. I've also been thinking that the armor proficiency traits should not be requirements, but rather give bonuses to using those kinds of armors.
Also increasing base initiative to 100 and increasing the bucket to something like 1000 would really help with balance.
Looking at it I'm like 99% sure they are going to make suits all one piece. If you take a look in the research tree a the techs that unlock armor they all show armor as a single piece (for instance "leather armor: +5 defense") I think in the past it used to show each piece? But I could be wrong. I would like a few more armor types as well! I feel like the best solution is single armor types with separate head/feet/cape slots for magic items. I like your idea about proficiency traits changing to add bonuses, what about giving armor a doge penalty which is then removed if you are proficient with the armor? That way a unit or random dude would suffer some from heavy armor, but an awesome legendary hero would move like normal in it?
My issue with upping the initiative is basically i feel like it would make it a lot harder to understand? I mean I already have some issues figuring out just how it works now, I know higher is better obviously, but sometimes its hard to see what difference having a say a 20 initiative vs a 22 initiative makes in the large picture. With a bigger ranger obviously some things would be clear, it would be easy to see the difference between init 50 and init 100, but I feel like it would start to be impossible to notice those bumps of one or two initiative, do I spend time when making units worrying about if it has 66 or 67 init? I would now, but i dunno if i could notice a difference. Also it would really force them to re-balance like every item and a lot of traits and they may not want to do that.