maybe I'm biased but I feel that going for an all horse-archer army could be a viable tactic

(granted though, even armies where every horseman had a bow, many also had melee weapons)

I support changing the effects of initiative, but as opposed to having it only determine the order in a turn, I would rather see a softcap of 2x moves compared to the slowest unit in the current battle.

Mathematically this could be accomplished pretty easily:

1. Look at the lowest initiative and the highest initiative in the battle.
2. If (and only if) the highest initiative > 2x the lowest initiative, normalize all initiatives relative to the lowest so that the highest is now 2x the lowest. The calculation should be lowest + (unit's init-lowest)/(highest-lowest). This forumla would need to be recalculated whenever the highest/lowest initiatives change.
3. Invert all initiatives (2 becomes 1/2).
4. Calculate who goes next by simply adding each units initiative to a cumulative total for them after they go (and on turn 1).

Other than that I support abilities to damage those exiting a ZoC, charge and shield abilities, all of which are optional adds available early in the game.

Kiting is not the only time initiative matters.  I've had casters with such high initiative, that I can nuke an entire formation with Fireballs before they ever move.

Almost any system you choose is going to have advantages and disadvantages.  Enabling kiting is the big disadvantages of Initiative.  The best option I can think of to reduce this is to reduce the opportunities to increase your initiative.   Though I take every advantage of it I can, I have to admit that several of those level up abilities that give extra moves and turns at the start of combat create the most lopsided battles.  I pains me to say it, but I think those need to be removed from the game or SERIOUSLY reduced.

I might also add that the best counter to ranged kiting is ranged attacks.  Perhaps archery needs to be slightly increased in power to be a bit more competitive with spells and the AI needs to be tweeked to build more archer units.  

That reminds me of a bug I meant to report.  I'm starting a thread now.

There is also the issue of strategic kiting as well.  All monsters can currently be kited in a sense that they can be baited into chasing you, leaving their lairs unguarded.  You circle back around and take the treasure without a fight and destroy the lair so it doesn't spawn more monsters.  The homeless monster then wanders around like a lost puppy.  I have mentioned before that some/most monsters should be able to move more than 1 space on the strategic map to prevent this cheesy way of getting treasure that should be out of reach 'til later in the game.  It spoils the act II/III game.  And unguarded lairs are kind of boring.  Lairs should send out weaker patrols, but the big boss should stay home.

AoE spells have been drastically changed. Need next beta to know if it is a good balance.

All concepts to nerf archers to fix kiting are missing the point because they almost inevitably nerfs archers in situations where this isn't intended.

So... what could melee troops do to counter infinite kiting... without making them overpowered in "normal" battles?

I suggest a Charge ability (which differs from legaceez' Charge ability. =P)

This is a passive ability.

Non-ranged units automatically (or often) get this ability.

Every turn the unit is moving but not attacking, it gains 1 charge counter, which is worth 1/2 movement point.

These can add up to very high movement rates.

Units with this abillity always and instantly cast a Snare spell on enemy units that leave their zone of control.
Snare caps a unit's movement allowance to 1 and lasts 1-2 turns. (random duration)

Certain actions of a unit immediately clear all Charge counters:

Attacking / Spell / Ability use.

Not moving for a turn.
This can be the result of enemy action. Paralyse and whatnot...
So there intentionally is a way of "legal" kiting - at the constant expense of magic.

Being next to an enemy unit.

Player-only restriction:
The tile where the unit started it's charge (0 counters) is recorded.
At the end of each turn, the unit must be at least 1,0 tiles farther from this original tile or all counters are lost.
This makes it harder to circle an enemy unit infinitely.

In a normal battle, all of this would have practically no effect. Occasionally a unit might get an extra movement point but that's it.

In a kiting battle, the hapless targets speed up. And speed up. And...
eventually get next to the kiting unit.
Yes, they lose their own Charge counters (being next to an enemy unit) but if the enemy tries to continue kiting (leaving the target's ZOC), it is hit by the autocast Snare.

That's when the fun starts...

On it's own, this would destroy any skirmisher units and/or horse archers.

Therefore, there would have to be a special skirmisher item / bow / quarrel / ability as an alternative to "line" archers:

The unit gains the passive Harrass ability.

It limits the units shots per combat to something like 6-7 total. (has to be very low!)

The unit can fire two shots per round.

On a hit, it clears all Charge counters on the target unit and hits it with a 1-turn duration Snare spell.

As a result, skirmishers can actually be useful to disrupt the enemy formation, distract / redirect attacking units... and survive the experience.
They just can't do this forever, destroying entire (melee) armies single-handedly.

Since skirmishers (kind of a ranger/hunter unit) can very briefly snare targets, they can be useful in addition to line archers.
The archers form a base of fire while the skirmishers harass and delay the enemy, keeping it in the ouch-zone for a longer time.

Against a large army, a tag team of 1 archer + 1 skirmisher will fail because the skirmisher runs out of ammo quickly.
As part of an army, supported by heavy units, both can be useful.

An interesting array of "solutions", but none really adress the issue of having multiple moves/actions within a single "turn". Archer Smarcher, spellcasters with high initiative do exactly the same thing. Nerf the mages too? That simply wont do!

The one I really liked, and what I propose too, would still be to simply let initiative determine the order of the turn, with a closed turn system. Unless someone has Greater Haste Then he should be able to double up in a turn.

Ok, the best way to fix this is to change the objective of fight.  You can win by killing off all the enemy, or taking away their control point.

Each map will have two control points.  There is one for each side.  They are located on opposite sides of the map, behind where each army starts.  If the opposing army sits in your control point uncontested* for 3 turns, then you lose.  It could either be an immediate loss, or every unit starts to take damage every turn.  This could be from panic/morale loss caused by having their avenue of retreat cutoff.

This solves kiting, because instead of chasing you around the map, the AI will just head for your control point.   

I like this because it doesn't require any tortured mechanics to nerf ranged units to avoid this one corner case.

Thoughts?

*Uncontested means not engaged in by melee.

I like it. 3 turns might be too quick, but uncertain. Would certainly add an element to battles though.

What happens if each team has captured the other control point? Draw? Or does it only work if one team has both points?

No offense, but I don't want the solution to the balance problem to be fixed with a capture the control point gimmick. That has nothing to do with war. 

You might expect something similar to happen with really good terrain bonuses though. Armies will be trying to control hills and stay out of marshes. 

No control points/capture the flag scenarios please - I'd really hate it if tactical battles went down that route.

The battles in this game are skirmishes. We are not fighting over landmarks, we are fighting to the death. These battles are not over forts and strategically defensive positions. They are in the wilds. There is no point where securing an area would cause the enemy to retreat. It is win or die.

The objective thing you mention makes up only a small part of the type of warfare one would experience in the environment this game presents to us. The goal of combat, as stated by the devs, is to be fast and fun. They are completely disregarding supply trains, except trade between cities. Even siege battles are skirmishes outside of a city.

Given that, objectives would only make sense in a small fraction of the game, it does not make sense to make every battle reflect that minority. It is also too much to implement from a development standpoint to be used for only a few battles and maybe some quests. Routing and flanking is also beyond the scope of this game. Control points would not sufficiently mimic this concept anyways. 

Besides all that, controlling a single tile is a meaningless gesture on the battlefield. All battles take place in an open field. There is nothing of value there, except terrain bonuses and penalties. 

In the historical cases of hit and run enemies, the best defenders would use forts, rivers, hills, or even fires to create a situation where the enemy would be forced to engage or retreat entirely. Most of the time though, the attackers that are good at hit and run are the eventual victors. This is because there is no capture point in the middle of a city that can be held for a day or two and then the battle is over. That is why I don't think it makes sense here either. What kind of "objective" are you saying they would beeline to historically?

As I have mentioned a few times, a good general finds a defensive location and tries to lure kiters close enough to his archers to deplete their numbers. Having a range bonus on hills would be a great solution to kiting. Good terrain bonuses will be the control points on a battlefield. If you are caught in flat land with insufficient troops... die well brother!