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I mean, capturing a town just for the market isn't worth it; I only attacked because they were blocking the way, but otherwise, in my opinion, it's not worth it. It would be a different story if there was a Naga Bank, a Hive, or at least something valuable there, but a market? :o As an alternative, you could build a prison if you plan to remove the tavern in the castle.
If you don't like the Dwarves, you can use Medusas in a 2-cell formation; it's definitely better than Imps.
Two Fairy Dragons can break through with a growth bonus of 2 weeks; I wouldn't recommend leaving only one.
I also forgot to make the neutrals bloodthirsty so they don't join you.
You definitely don't need fewer Peasants; 500 HP with a speed of 3 will be defeated by almost any starting army.
45 Snipers is okay; now you need to decide whether to attack them or 2 Dragons. It wouldn't hurt to add another 15 Mages instead of 7 to balance the passage.
The Medusas are a good idea.
I won't remove the market; what if the Mages don't get enough resources? Then the market will be useful, I think; there's also a Garden of Knowledge next to the market. And the second passage with gold and a level 1 building, I think, is a small but nice bonus
