Thank you very much, Impy and mare911.
About glory:
I have always considered getting glory to be very important - as a mage I have very little leadership to start with already. On normal/hard that was sufficient for me to get more offensive and healing power to make my way through. Not good enough for impossible though, as my situation clearly demonstrated.
About empty item slots:
I'll read the info thread again, this time really get into the maths. I was skeptical about how good are +1/+2 to attack/defense stats.
About trap spell:
In my previous mage game I got all the trap medals - I didn't find it too useful back then, to be honest. I must cast it against natural obstacles, or the AIs will just run right around it, and still the trap will only delay them for one turn while blocking me from casting other spells. I'll try combining it with a small army and dragon wall.
About skill focus:
Since equipping some +1/+2 attack/defense artifacts did the trick, that means I was wrong not getting a level of the might skills.
Thanks again. I'll take a look at the save you uploaded, mare911, and compare the item/army config against mine. Then I'll restart - my skill choices are a mess!