Few lvl 1-2 units have good resistances and will die like flies to the bosses' mass attacks. Turn-backing may help, but that spell is very, very costly and I wonder how long you will be able to hold your ground against Zilgadis, K'Tahu and Baal. Fairies and Dryads may still do some considerable damage, but few level 1-2 units are good enough to provide some tanking (and spawning thorns requires some time, since dryads have lower initiative than most high-level units).
Other difficult armies to beat will include dryads, evil eyes/beholders (their sleeping attacks seems to proc against lower level targets much more often), and others.
The only difficulty that can be won with Peasants (or other lvl 1 unit) only is Easy, I suppose. Enemies (even bosses) are weak and Resurrection spell can cope with the losses.
Still, that challenge may be possible, but the true trial by fire will be the final boss battles, as their attacks are very powerful and will surely deal 300% damage to lvl 1-2 creatures due to the atk/def ratio and that may push some general attacks to well over 8-10k damage - and that hurts.
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