1 - I have won as the Union against Easy AI, CPU production control for both sides. But it was tougher than I expected for the Easy setting!
2 - Yes, it seems unlikely the Union can fight a war of attrition and win, as I posted in one of the first AAR strings you and Kennon had going. If the Union gets lucky with initiative early, that's something the South likely can't recover from, but in the later war years, the Union struggles to make up ground.
3 - Haven't thought much about this, but it's tough for the Union to move in Virginia, and we get stretched out West. I can't imagine re-creating Shermans march on Atlanta, either. Not very practical in this game. I think having an option of choosing to come at Virgina from the South, or march to the coast would add strategic choices for both sides, but the Union doesn't get enough initiative to go through those rural areas, and it costs too much to be there.
In general, I can see issues with balance, but I'm not sure how to reconcile that balance. Your 3 questions certainly lead one down the path, though (nice job!), as it would likely take a combination of things to even it up a bit.
General Jeff Laub
Union Chief of the Army
ACWGC Cabinet Member
http://www.geocities.com/laubster22/UnionHQ/