Yes, that is a limitation of the battle engine. It assumes you want to win the battle, not merely "wear the opposition down". It will probably be the same in M2, it's been more or less the same in all the TW games.
The only thing that really changed in RTW is that after retreat or defeat, sometimes the survivors are snuffed by the game. The reason they did that is because RTW is no longer a province based game and I guess they figured it wouldn't work very well to have remnants of armies left behind after every battle to try and deal with. In STW/MTW that wasn't a problem, because remnants would just retreat to the nearest friendly province.
Bookmarks