The main reason archers dominate in Strategus at the moment is that it just makes more sense to buy expensive bows than expensive armor. I can buy a bunch of nice horn bows or rus bows and be pretty guaranteed to keep most of them if we win the battle, as dead archers can run out and pick their bows back up.
It makes little sense to buy a suit of plate mail for anyone, though, because when they inevitably die, that armor is lost forever and costs a crapload.
Why DOES their armor get lost forever, anyway? Did they explode? We were fighting in a swamp? Do we just always bury warriors in their armor as a sacred ritual so that they can be protected in the afterlife? Sod that. If you die, I'm taking your armor back.
To that end, I think chadz could solve this easily in the web interface.
Examine: equipment before the battle vs equipment after the battle.
There is a percent chance that the victor can recover lost items. The percent chance increases based on the value of the item. Plate will get recovered more often than not; peasant gear will get lost more often than not.
Alternatively, perhaps there could be some sort of "salvage" mechanic. Lost gear gets turned into "junk" which the victor can recover. The more valuable the lost items, the most junk you get. Junk can get taken back to a village and quickly converted into new gear. So, say, every 500 gold of value (cRPG prices) turns into 1 junk. You lose 1 Milanese Plate, you get 63 junk. The conversion rate from junk back to items is 2:1. So 126 junk can be turned into 1 Milanese Plate. Or you can turn it into some Mail Shirts.
Money is still leaving the world at a good clip, but if you lose your 20 armored knights, you can at least create 10 new armored knights for free, from the junk.