At first glance like if you lose battle #1 you end up restricted on your choice of units to field, and the opponent gets to pick terrain and a free card, putting you at a disadvantage for battle #2.
Perhaps I didn't write the campaign rules very clearly. There's no reason why you'd be resticted in your choice of unit selection in battles significantly more than your opponent if you lose unless you get thrashed. If you get thrashed consistently then you're doomed anyway.
What I'm trying to do is introduce small bonuses for victory that won't allow the opponent to snowball their way to victory while introducing the friction of campaign attrition. I welcome any suggestions.