Tactical battles need some pretty serious tinkering to be interesting, I think.
Zones of Control is high on the list of things it is in absolutely dire need of. Disengaging and running past enemy units should be extremely dangerous. Because otherwise movement is basically just shuffling a bunch of Rooks around. Uncommonly tootless Rooks, unsupported by any other kinds of playing pieces. Or... Not having zones of control makes positioning almost meaningless and terribly dull.
A greater range of movement speeds is also way up high on the list. 2 tile movement is OK for heavy/shock troops. It's too low for light infantry and too high for archers. I hesitate to suggest an increase for cavalry, because it would really require longer maps to not be ridiculously over-effective. With ZoCs in the game it also opens up for different types of movement. A skirmishing unit, for example, might not be able to move past an enemy unit without getting attacked, but they might be able to disengage an enemy unit without getting attacked. While an invisible unit might be entirely unaffected by ZoCs as long as it stays invisible.
Wider battlefields as well. There's no space to flank or surround your enemy at present, and there should be because it makes positioning more fun and more important.
Terrain modifiers on a per-unit-type basis too is pretty important. Why are cavalry units just as good on hills as light infantry. Why are archer units just as accurate against units in woods as they are against units on plains. That sort of thing.
The only way to un-break the endless Turn system, is to set a fairly low time limit on battles. Otherwise the benefit of high initiative will either have to be so low as to only matter in 1/50 battles, effectively making it meaningless... Or it will be more or less as is, which is horrendously over-effective. I strongly suggest going back to the multi-Turn system, and simply re-scaling the effectiveness of initiative accordingly. Putting a time limit on battles doesn't stop initiative from spiraling, it just stops it (at best) from spiraling out of control - and the time limit will almost certainly be a pain in the neck to try to keep track of for the players in an endless Turn system.
Archer kiting is kind of silly. Real archers aren't Tolkien elves. In the real world practically no one have ever fired effectively while on the move. The kind of volley fire the British longbows were famous for required a carefully set up position. Skirmishing didn't mean running towards your enemy while madly trying to fire off some arrows, then running away while doing the same. It meant setting up an ambush and firing from a fixed position, then falling back to another and fire from there.
Facing would also be cool, but it is infinitely less important than everything mentioned above. Still, facing would make positioning even more important, which is always a really good thing.
Morale, likewise, would be cool. And I don't mean army morale, I mean unit morale. If my spearmans are getting creamed by something really big and hairy with waaay too many teeth, they should probably at least consider running away. I know would. But like Facing this is way, waaay down on the list of priorities. It won't make the current unfun battles fun, but it would make fun tactical battles even more entertaining.