The current morale and technology systems work OK.
I disagree. I think the morale system works very poorly indeed. Even when one's army wins a battle, it loses morale as it fights to that victory. Many times, one's army can be winning big, yet run out of morale and run away from a force it was about to annihilate. What sense does that make? I know if I am winning a fight, I feel great even if I am getting tired while doing it. One could argue that in the chaos of battle, anything can happen, and winning armies (or armies that could have won) could easily be set to flight by some miscommunication. But how often did such really happen? Flukes are called such for a reason.
Morale-based losses should not happen without a reason. Morale should not decrease without a reason.
Being shot at with firearms and cannon was enough initially to cow many American natives, for instance, so tiny European forces being able to defeat them easily makes sense.
But setting bayonets and walking right into withering clouds of musketry eventually became of a way of life for European soldiers, so having them lose tons of morale if they're not really losing the battle does not.
I have faced one too many instances where I've had fully paid troops at high tech levels run away from armies of rebels a fifth their size, or pirate fleets a tenth their size. This part of the battle system is ridiculous, because exceptions (smaller forces driving away larger, etc) are the rule.