Sylvan Elves versus Demons.

Regarding hit-and-run tactics. If you only use archers, buying them back a few times isn't that expensive and it's worth it. You could sacrifice dragons or some other artifacts, for example. Artifacts should ideally boost initiative and defense, and preferably include at least 2 artifacts from the Necropolis set. I mentioned earlier what skills you could focus on for leveling up. The School of Light is the best choice.