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Yes there's only three possible armies. The second army is unlocked at pretty much the beginning of the third chapter. Don't ask me why they removed having any hero lead an army though :/
 
On the other hand, unlike KA1, you do not need a hero to be the leader of the army to benefit from most army wide bonuses if I remember correctly from beta.
 
I was wondering this aswell! Thanks for clearing it out. I wonder why they removed that feature

Well, we didn't remove it, we replaced it. With more character-driven quests :)