It's hard to judge these things from the demo. You don't actually control much cavalry - two at Hastings and one at Pavia. But so far so good, IMO.
I like the fact that the AI knights make almost no impression charging frontally on braced pikes (Pavia) or dismounted chivalric foot knights (Agincourt). It fits my understanding of history. Charging knights do cause some casualties - esp. at Agincourt (more so, if the English were not so experienced). It may be over a little quickly, but this is a game and battles will last less than 40 minutes rather than a day.
From a gameplay point of view, even if cavalry is prima facie underpowered, I think it will still be extremely useful by virtue of its mobility - it can whip around a flank much faster than infantry and is also much better at running down archers, cannon etc. I play Rome Total Realism Platinum where cavalry seems to have similar power to M2TW but they are still like gold. (A cavalry charge to the rear of an engaged unit is the killer tactic).
AI knights seemed to do fine on the few occasions they did not commit a frontal charge on a prepared position - e.g. the rear charge at Agincourt. They trounce longbows and it is mutually assured destruction vs non-braced billmen.
I have not experimented much with my cavalry at Hastings, but the Pavia general is a monster (the 2 hit points helps a lot here). Very useful for finishing off the French king after he has floundered on the pikes; for taking out the Scots Guards; the cannon; the crossbows etc. A target-rich environment, as the USAAF might have said.
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