In my clan, using the new functionality of M2TW, some people tried to play a campaign with MP battles. But it was really a because of the problem that Myrdraal points: how to represent the loses in one battle.

One first problem, the availability of mercenary units, was solved by making them available in custom battles for all the factions involved in the campaign. (all players had to use the same export_descr_units file, of course)

Even with rules about disbanding units and creating new ones, the script is fully necessary to kill the generals that find death in battle, as you cannot disband a bodyguards unit. (afaik ) But I'm not sure if this comman (kill_character?) is fully functional or not.