To avoid repetition, you could give the knights a terrible synergy.
Is that the one where Altgarde's horses are replaced with demons?
In general, I liked the idea of upgrading Death to level 7. I would even give it a Death Strike ability; the only thing is that its "something" should balance it out when choosing the upgrade. Let's look: What is the strength of, say, an upgrade with this ability? To take away a lot of troops from the enemy, so you need to get to the opponent's units faster. Accordingly, we reduce most of the stats of the Herald + initiative + speed. This results in a weak but dangerous unit that is best not to approach closely.
Therefore, the upgrade should be the opposite of it. Accordingly, we make a fast Death Knight, strong and powerful. And we keep the "best not to approach closely" ability with the Nightmare upgrade, possibly with a curse/fear attack.
Let's move on to the weakened knights (I just didn't understand if they should still be on a dragon? Then there will be 4 flying creatures in Necropolis, which is too many). You can simply remove it from the dragon and repaint it. Next, we get level 6 units. One can be made faster but weaker, say, with a curse attack, and the second, on the contrary, slower but with a fear attack. In addition, we give the Confusion spell at a medium level. One of the knights can be "tried" to be made incorporeal; then it would be better to add a blinding strike/vampirism to the second, so that there is definitely a balance.
By the way, you can also give the Deaths a spell, for example, Unholy Word. You can also think about blindness or berserk, but only once, but at the maximum skill level ;)
Death can be made flying, since at level 7, units either shoot, or fly, or throw and break walls ;) Lava dragons don't seem to be able to do anything on their own, in my opinion ;) There can't be any silly obstacles for Death as such, like a fortress wall.
The only thing is that we will have to redo the building in the castle to +1 to units, since there is already a blatant imbalance. You can replace it with +1 to the growth of knights, as an option. (If possible).
Something like that ;)
This is what I wanted to say. I perfectly understand that many (including me, I accidentally deleted the model) do not like the dragons of Necropolis. And everyone thinks about how to improve, move, replace, change them, etc. And everyone has their own interesting opinion on this.
I just liked the idea of putting the knights on level 6, where they should be, and upgrading the Deaths to "lords of Necropolis". There are already too many boring dragons; it would be better if all of them were exclusively neutral.