Just a suggestion; the traits, Flame Tongue and Soul Spark. I haven't found a situation where these deal more damage than my other offensive options. My suggestion is to make these automatic. Every melee attack gains Flame Tongue's damage and every ranged attack gains Soul Sparks damage. This kind of pushes the factions in more unique directions (a range focus versus a melee focus) and might make them a little bit more interesting.
In addition, I think faction traits and the tech tree can be used together to make the factions feel more distinct. Some of them have that feeling, but more than half always end up with a bunch of guys on horses or wargs steam rolling armies. I'm going to compare it to Galactic Civ 2 right away; I felt like Trade and Diplomacy were pretty powerful in that game. I'm not getting that from Legendary Heroes. I haven't found any need to trade, and diplomacy always ends up in war. Most of the faction traits are combat oriented (weapons, monsters, stats). Even focusing in on Civics, your end result ends up being Dragons to dominate combat (which is cool, another suggestion incoming here).
Is it possible to see more trade oriented options? Maybe the Commander hero type could have more trade/peace related abilities. A Merchant henchman? What I would really love to see is material trading treaties; You send me 5 Iron, I send you 5 Crystal every 5 turns. You send me 5 Horses, I send you 100 gold.
As Dragons come to mind, it would be interesting to see monsters and beasts tied to faction traits (Like the spiders, golems, etc.) that act a little different. An angelic creature that replaces the Dragon, but bestows an Unrest bonus on whatever city she resides in. A creature or special unit that can destroy roads. Generally, I lean towards faction traits that directly change my tech tree - this is the only time my faction really feels unique, when I don't have armor/have special armor/have special units.
Unit traits also look like they need tweaking. There's two or three traits each for +1 damage or +defense, I believe. I'm sure it's because one used to be tied to encumbrance, but maybe this is where you can incorporate things like Flame Tongue and Soul Spark. Faction specific unit traits, rather than having all of them available to everyone.
