Funny that Fey strike you with lack of 'magic touch'.
Because I did play Fey a lot with two different heroes, and I was actually overwhelmed by the 'magic touch'
Basically every building has it's own special spell or spells that have different effects on nearby units, and these can be combined, making even the weakest unit quite dangerous adversary.
And just because they were so magical, it started to wear me off during longer plays.
Despite I also first felt that the units of Fey were somehow tuned down in power, they true power is then secured soon after, when all the upgrades, hero skills and mentioned buildings spells on top of their natural high speed, they turn out be more deadly than huge dinosaurs or even resilient knights...
BTW, I found it quite rewarding to combine Fey with Geomancer (Runemaster), who with some investment into Runemagic can cover the obvious Fey weakness - defense, by casting Homeguard (Fey buildings can be surprisingly resistant, yet small, so you can literally build a wall out of them and each building turns then into a rock hurling tower...)
I actually miss the late game benefit from +100XP upgrades (these were cut in half and instead 9 upgrades, only 5 are now available... and XP is not more essential to the game than before)