A lot of fun. However, while I like the idea of no unit healing, it has some problems. A new player might not know all the different ways to get around this (high priest heal spells, golem repair spells, summons, undead units, and maybe other ways like the cannibilize promotion) and it could be confusing. It limits the players options to one of the above plans. Also, since ships could heal, and only my ships were getting damaged for a long time, I totally forgot about the no healing rule, and initialy thought it was a bug.
For my game I went Octopus Overlords, and built cultists and stygian guards (not sure on spelling). Healing wasn't a problem since the guards are undead and had march as well, and I crushed every city by the water with cultists with minimal loses.
Also, I didn't see any of my units that died turned into skelitons. Can the enemy promote them up to some other unit? Or do the skelitons not appear if you fight them on water, or with undead units?
But all in all, this was one of my favorite scenarios, right after the retrieving barnaxus one.