"Now, this fight brought up a number of little nits with the system. The Sleep spell is not explained very well. Or specifically, the area and how it is targeted. By my reading of the ACKS version, it effects the targets you want it to, so there is no danger of sleeping your own party. This seems extremely powerful, but otherwise I’m not sure how to play it. Also, initiative. I’ve been letting the player’s hirelings act on their initiative (rather than rolling for each pc and hireling separately). This is good for speed of play, but feels a bit awkward (especially when a high dex bladedancer is rolling the initiative for a group of 4 characters). I’ll probably not do anything about this though simply as any other choice would be too difficult to implement in actual play."
APM: Another great session report! A few thoughts in response to points you raised.
Townhouse - 1st level adventurers on their way to 2nd level are almost as wealthy as master smiths. It's well within the means of a group of such adventurers to buy a town house.
Sleep - You are correct that in ACKS the Sleep spell effects the targets you want it to, with no danger of sleeping your own party.
Initiative - In my home campaign we use the RAW and roll initiative for each named PC and NPC, and for each identical set of creatures. Once your players get used to it, it runs just as fast as having the NPCs go at the same time as the PC, and is actually more fun, because it breaks up the action.
For example, let's say Bob, Steve, and Luke each have 1 PC and 2 NPCs. If each NPC goes at the same time as the PC, then the turn order is going to be more-or-less, Bob/Bob/Bob/Steve/Steve/Steve/Luke/Luke/Luke, or some variant thereof. If you separate out the PCs from the NPCs die rolls, you will get Bob/Luke/Steve/Luke/Steve/Bob/Bob/Steve/Luke, or some variant thereof. So each person has more opportunities to jump in and less time spent waiting. Just do an initiative countdown 10...9...8...7... down to 1.
Also, if NPCs act on their PC's die roll, it's a huge benefit to have all the NPCs work for the highest DEX PC. That's obviously a grotesque rules distortion.