I know how difficult, complex and time absorving mod making is in general, particularly combat values balancing; that's why I want to make clear that all my criticism -obviously subjective- is made from the most absolute gratitude and respect to the AE modding team.
Well, the fact is that the first release of AE left quite a good impression on me when it came to combat system: it was realistic and fun to play, though the AI had its usual flaws -hardcoded I'm afraid-, like breaking its own line when moving or cavallry frontally charging against spear-pike units in formation. All in all, the projectiles were well balanced, frontal melee casualties were scarces and moral penalties were reasonably proportional -once surrounded, an army was likely to panic, just like in real life. However, with the successive updates and changes the moral penalties have been reduced, specially those for flanking and rear attack which,, after the last update, have been reduced to -1. That is, a unit being attacked from the rear and the flank will only suffer -2 morale penalty. On the other hand, morale penalty for casualties is remarkably low as well. If the units are of a lower tier, with lower morale values, the reduced penalties are not such a problem; but facing elite units makes the combat too long and unrealistic. An example: I'm playing Macedon against Odryssians, and I am defending with my phalanx +light inf.+cavalry against an army where 80% of the infantry is elite tier 3; I get rid of the enemy cavalry and light infantry and finally I move my phalanx, cavalry and hypaspists in order to charge against the thracian infantry line from behind while it is engaged with my pikes; not a single enemy unit panics, and it takes few minutes till some of them start wavering; I see thracian units that are exhausted, surrounded and outnumbered, that have lost 70-75% of their men having still 5-6 morale left and causing a lot of casualties to my army; after a while, my units, decimated, start fleeing while the also decimated, surrounded and exhausted enemies keep on fighting without problems, still with good morale level. We are talking of pikes in formation (4'5m-6m) against phalx and 2'5 m spears. But the highest damage was suffered, in the end by the pikes. Even a phalx unit run through the ranks of a formed pike unit and then attacked it from behind, routing it after a while. Sometimes, in other battles, after surrounding the enemy I had to set super-fast time compression on because routing the rounded up units took literally an eternity. I am afraid thet either morale penalties are too low or morale values for units -specially tier 3- are too high.
I don't want to always finish the battle by performing the old hammer and anvil but, at this point of AE's evolution, I think that maneouvering to isolate the enemy is less important for the final outcome than the defense-attack-armour unit values that will allow them to fight longer and longer, which reduces the creativity element when fighting a pitched battle.