One thing this game is very terrible at is that there are too many meaningless battles, you defeat one or two or even three stacks, but in the time it took to do so, the AI has already thrown out another three and so you've achieved little. It's a constant war of attrition and endless grinding come mid- to lategame because losses mean so very little. That goes for the player too, even in the unlikely case you actually lose battles, you just build another army and the loss means close to nothing.
So here's my suggestion, make it possible for factions to run out of lords. Not permanently, but there should be a cooldown once you've recruited and fielded a certain number of lords. So you take out a lord out of the pool and into your roster but his slot in the pool is only replenished 15-20 turns later. Could also weigh it so that advanced lord types have smaller limits than more generic ones. So elf princes could have three slots while archmages would come only one at a time. You could have a mechanic in place that slowly increases the number of slots depending on the territory you control, so +1 slot of every X regions you capture for example. That way losing characters and territory would actually have a meaningful impact on the game.
Also, immortal lords and LLs under this system should have the chance of picking up negative traits that increase their recovery time the more often they are felled in combat.