If you want to replace your troops with undead, it means you expect to gather a number of undead comparable to the enemy's. And such a force, even in the hands of a level 1 hero, can deal serious damage to the enemy. And if there are one-off upgrades along the way, he will be slightly strengthened as well. The plus is that both undead and your own troops will be utilized. Of course, provided there's enough money for everyone. The minus is that the enemy might get an extra level up.

That's exactly the point—gathering a comparable number of undead is impossible. As I recall, Nicholas has five or six Castles at the start. You have two—the conditions aren't quite equal. And with Nicholas's skills, he assembles his army significantly faster, which is why he arrives with x*K skeletons and other own filth. If you try to assemble a comparable army, you will waste time, and in this mission, time works against you at the beginning (meaning you need to act quite quickly)