I don't feel sorry for enemies, and if neutrals want to join, I let them go, as I don't need either units or experience. Or, if there are few of them and they run away, I let them go too. As for my own troops, I try to minimize losses because: 1 - a larger army is better for the next battle (a practical consideration), 2 - a bad commander doesn't care about his soldiers. I don't feel sorry for kamikaze units, but I try to protect my elite units, and it's very upsetting when I lose them for no reason - for example, the enemy uses a "Suffocate" spell and runs away without taking any damage (although they actually lose troops - but where is the reward for the fallen?).