Also, knowing what armies to use on what map is vital as well.

The Mages absolutely slaughter the big ogres, Dwarves(esp if you convince the Legion of Death to join you as they do serious damage) and Humans are excellent for the rest, and then the Elven archers are great for the Archdemon.

My armies were straight up murking fools.

The archdemon wasn't that tough for me on the hard setting.....I beat it with and without Morrigan. The former option allowed me to have my normal party(tank, two-hander, and two mages) so it was relatively easy while the latter scenerio had me inserting Shale into the party instead of Morrigan....so two tanks, 2-hander, and a healer. It was tougher but the key was keeping Wynne in safe areas and since it was the second time around, I also knew what armies to use at what point which helped tremendously.