You're right about the dwarf becoming too specialized. I think we'll have all the nerf we need in beta4, actually, when they don't share their movement bonus. I actually find Light Cavalry's current bonus to be invaluable. I love to smash valuable stacks with them, and I love that you can bring them along with your hero with ease. I'll trail stacks of 4+ a few moves behind my hero stack and then group them strategically with each of the hero's attacks, eliminating gobs of valuable troops in open terrain with one hero, sometimes multiple stacks in one turn, and losing only inexpensive Light Cavalry. I play offensive defense and defensive offense, if that makes sense.
This game is great even just as it is.
I'd love to explain my stack-juggling in detail, but that might improve the competition's technique
Just don't come near a city with a hero if you can't attack it the same turn, and don't march out if you can't reach my attacking forces in one move! Stack bonuses are the bee's knees. I absolutely adore them, and they won't be included next time because of a few players' comments. Someone comes up to a city with a pile of heavy infantry boosted by a Pegasus, and a hero stack. Obviously planning to weaken or threaten it with one stack leaving the other to have its way. Pop a Forest bonus with those spare 15 points, kill the Pegasus stack, return to the city, and leave the enemy hero to wait for your reinforcements or run with his tail between his legs. Balance your sallying force with heavy infantry in front (boosted +3 by hero and allies, just a few of them), then an elf (str 8!) to prevent the Pegasus from touching your allies, and you come out 20 hero points ahead.