Well this has been a very moderate and reasonable discussion about slight changes to the dreadknight, but I'm going to go in a totally different direction. This is a hero who's current powers and role aren't a very good fit for a dark knight type.
The way I see it, evil is a shortcut to power. Evil folks are all about instant gratification. They want it all, they want it now and they don't care who they need to crush to get it. It is the good guys who struggle to master their skills. Evil fantasy types sell their souls and sacrifice innocents in unholy rituals for their evil powers. If you look at it from this angle, then you'll see that the dread knight and paladin are backwards. It is the DK that should have the advantage in the early game, and the paladin should have the greater potential. The paladin can have high intelligence, why not let him use it?
If the dreadknight starts with a better stack bonus than the paladin, but the paladin is the superior ruin hunter, then both classes have clear strengths, and roles to play.
But never forget that the dread knight is supremely evil, and slightly mysterious. What lies beneath that dark suit of armor anyway? Is he human or is something much more horrific?
Here are a few Ideas to give the DK some character:
Dark Pact> the DK has sworn to the infernal powers that he will spill the blood of 100000000000 innocents (he's an ambitious guy). Whenever he razes a city on capture, he gains +1 chaos.
or
Immortality> the DK doesn't die like normal folks. When he is 'killed', he drops items as normal, but he re-appears in the capitol after a certain number of turns. 1st death- 1 turn, 2nd death 2 turns, and so on.
I know, crazy ideas are just how my mind works.