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I'd actually say go for the 3 isles south of your position second, after wiping out the enemy dwarfs. After that it's either Grimgor is ready for war or time to pick on the lizardmen and secure the lower corner. Once the lil rats are gone time for the crazy dark elf. On the map you want to take your starting region, wipe out the dwarf at war with you then move on to Eshin. Think i had the first one before taking Eshin on, though some fights are much harder than others so that is luck. Though of course if you can win those fights early you get some powerful dragons to ease the early fights.
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If not i'd always just go for the battle option, it creates a quest battle that you can do when you're actually ready. When you get a dragon quest popup do it immediately, the bonuses are nice if you can afford them.
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Let the rangers flank, spearmen absorb missile fire and of course archers shoot the enemies. Get a unit or two of rangers, some spears and archers. By the end of turn one i believe you can have that and use the growth to get it upgrading. Someone else mentioned the minor settlement that gives you dragon princes with its unique building, you should get that going ASAP.
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