Hello welcome to the dark omen community.
Theres 3 things to edt an army book, one is the picture found in dark omen\graphics\books\troops.
Second is the desciption which is a bit of a pain as it unfortunatly involves a hex editor (i use HxD, its free), write a part of the current description down you want to edit, use the hex editor to open engrel.exe and use search->string to find the correct section then you can overwrite the current decription. Note do not change the number of bytes, so you can use the same or less amount of space as the orignal description, but no more, just fill the extra with bank space if you description is less than the old.
Finally the easiest is the actual stats themselves using Ghabrys excellent editor which you can d/l from this site.
Experiance I tested with olly and multiplayer wise the only difference between level1 and lvl 4 units is the number of items they can hold, using lvl1 vs lvl 4 flaggellant we saw no real combat difference, it was who charged what made the most difference thou there was still some variation (dice rolling). You can get around this by bumping up the stats yourself, eg lvl 1 merc @ 100gp, lvl 2 @ 200gp but and extra wound or whatever.
Yes leaders exist and yes they can have seperate stats and/or sprites if you wish. I think your confusing with a fudge in the dark omen engine. Dark Omen ignores all hits against the leader until he is the last unit in a squad.
Armour cost is max unit size * x, x = (10,30,60,100,150), x is the armour level, so to increase a squad with 10 units in it from lvl 3 to 4 = 10 * 100 = 1000gp. and yes it is a silly system , there is no way to change the formula but for multiplayer there is the same work around i described for experiance (ie have multiple versions of the same unit, different armour, different cost)