I really really like the flaming attacks idea.
I am reluctant to change the mortar's strength value because then it more directly competes with the hellstorm, the same with re-roll to wound.
I agree warlord: they are not broken: in fact, they are terribly well-balanced. Unfortunately, they have to compete with cannons, hellstorms, and all our special slots. I want to find some thing that keeps them in the same role in the army, and doesn't make them much more powerful.
Indirect fire does this: the mortar will likely stay undamaged for most of the game, throwing its S3 template around, but how you use it, what you shoot it at, etc. will not change very much. Flaming attacks as an upgrade would also accomplish this, enabling the mortar to threaten monsters with regeneration and such with a direct hit, but nothing else, keeping its anti-infantry role as its primary one. It could already snipe at such monsters, just now it actually threatens them.
How much should such an upgrade for incendiary bombs cost? 25 points is too many: that puts it at the same cost as Doom divers and screaming skull catapults (the screaming skull catapult has magical, flaming, panic causing ammo). 10 points? Flaming is not that powerful, after all.
I plan to make many changes to the engineer: I just haven't figured out what they will be. It may be that we come back and revisit all the artillery when we create the engineer; same with the general and captain if we make them have infantry abilities. For the mean time I want to do the ground work on the unit choices first. The heroes should be built (mostly) around what we have for units, not vice-versa.
That said: something I have in mind for the engineer: When you take an engineer, you may take one Mortar or Cannon as a Core choice. Or perhaps just a mortar.