Yes, I think this is the way is should go. Just a simple "Merge Units" option in previous Civ's would have got rid of the micromanagement. Instead of Units, you build armies. However, this would be uninspiring with a simple "strength" attribute that added up. Something like ratings for attack, defence (like the old days!), ranged attack would be considered separately.
I agree with those saying the current system is not good. It messes up the scale so much, I can't believe the decision got passed the first design meeting! If you could take your units onto a separate tactical map (like Heroes of Might & Magic), it would make sense. I've enjoyed Panzer General before, but generally hex wargaming is a totally inappropriate concept to the world building high level strategy of God games like Civ.
Hexes don't make the game worse - but after a few games, I don't think they are adding anything of value either. There's a reason hex-games have dwindled to a small cult following...

Hexes started as a board game mechanism before we had computers that could crunch a galaxies worth of numbers in a millisecond. On original Civ 1 and Civ 2, 486 processors with 32M RAM and 100Meg hard drives(!), tiling was a necessary abstraction. If anything, with quad cores, 4 gig RAMS and terrabit HD's, it's disappointing that we need any tiles at all.
Maybe the next step forward for Total War is to introduce hexes.....