I have to agree. I uninstalled it after about 3 hours. While I like the story (the conversation with TNO's dead lover was one the creepiest game moments ever, especially at 3 in the morning), the combat was infuriating for me and I hated it so much I stopped playing.
I was also really disappointed in Age of Wonders 2. I loved the first one soooo much, and I think the developers just tried to do too much in the sequel; especially with the graphics, which were just muddied and difficult to see units. The "Shadow Magic" version made up for it a little, but I felt betrayed, as it came out just a year later. It felt like a bad DVD double-dipping effort by a movie studio.