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I like this option:
Instead of undead, use Death Knights.
Don't touch the dragons.
A death with a scythe should be an 8th-level unit (like a phoenix). Of course, this unit would be stronger than the current undead. It would be interesting to give the Death Knights' ability (25% chance to kill half the squad) to the undead instead – it would make sense, and there wouldn't be an imbalance due to the Death Knights.
Instead of undead, use Death Knights.
Don't touch the dragons.
A death with a scythe should be an 8th-level unit (like a phoenix). Of course, this unit would be stronger than the current undead. It would be interesting to give the Death Knights' ability (25% chance to kill half the squad) to the undead instead – it would make sense, and there wouldn't be an imbalance due to the Death Knights.