A series of losses for one side can tip the balance - especially if one such loss was a lot of your forces. I recently lost a custom campaign because of such a series of losses killing too many of my units. It's hard to say how badly one has to be down before victory is impossible.
True, but impossible is probably a bad line to draw here. I'd say it's better if the victory condition can be triggered by some kind of upset. If holding 5 specific map points triggered victory for example you could end a lot more games with tense conflicts rather than slow strangulation.
Yeah, the Hard AI is really smart, but if you're already having problems managing your forces on normal, the enhanced difficulty wouldn't help. Do you think that would change if there were say, only half as many units on the field - both for you and your enemy?
I tried it out and it made quite a substantial difference. I still couldn't handle large conflicts myself but the smaller battles were really a lot of fun with the recruit rate halved. Not only was a higher difficulty manageable but the fights themselves became were much more interesting. Sadly the AI was not much less inept on the campaign map, it played some interesting feints but paid far too little heed to grabbing land early on. I found it no more difficult to just crush it using overwhelming force.