This week I can tell you that it is a balancing issue. I have been invaded by massive heroes and lost the battle, only to lose one War Medal. I have also been beaten out in close matches, and lost, and my attacker has taken home as many as 7 in a battle recently.
I would say choose your targets carefully if you are really concerned with War Medals. It's a bit like a league ranking system of a pool league I was in years ago. I was a mediocre player, so if I beat a top-ranked team, my ranking would rise a lot more than if I beat a player below me. In kingdom context, if the Holy Roman Empire defeated a tiny tribe in the woods, would that greatly affect their reputation? But if a tiny tribe in the woods won a battle against that Holy Roman Empire, they'd have a significantly more important status among tribes.
Keep in mind that we're within 2 weeks of launch, and the formula, and eventually gameplay itself, will forever be changing as the community evolves. Also keep in mind that we are listening to the community, and we will take every opinion into account as we go forward.
I can't wait to be given clearance to tell you about what we've got coming up soon!