What campaign difficulty do you players recommend?

[Korlon]

Is it really this better to play with the Alex.exe and is 1.1 running with it?

Certainly better. You won't see enemies attack you with those 3 unit stacks anymore. They actually combine troops now. They can also retrain troops as well. Diplomacy seems better. And they actually use their navy sometimes like that of BI.exe. The battle AI is certainly better as well.