Meh, the Op's suggestion is Ok but why stop there, you should be able to recruit peasent class troops from villages. they will basically be ok against weak parties like looters and some bandits, but honestly are fodder. maybe their max tier should be 2-3, no horses and low tier weapons armour. They should be cheap to recruit and maintain but basically be fodder.
Next up would be from towns. these you can recruit after establishing a good relation with notables in the town. they would essentually be mid tier troops, decent but nothing exceptional. more expensive than peasent class troops, but also more effective. some cav, but more light cav and such than heavy cav
finally you should have nobles. these would be you knights and top tier units. hard to recruit and expensive. a small party of these should be able to handle a decent amount of peasent troops and a fair few townsman tier. you would need to be in good standing with a faction as well as the castle owner. these can only be recruited in smallish numbers. certainly not enough to creat a army of them.
I fell it would give players a bit more of a decition to make, do they want a hoard of trash units and hope to win with over welming numbers, a group of high tier units that can crush but could be over welmed against a larger party, or a mix of all and try to balance their army out.
it could even lead to events that happen within the army between the different classes resulting in either increased party moral or less. maybe you side with the nobles and the peasents are more likely to desert or the other way around. perhaps you find a compramise they both like and everyone fights a bit better for a while.
Honestly i'd like to see a system where there is more to managing your party than, pay them, train them and keep them fed. i'd like to see stuff taht makes managing the party a little more involved, but not to the point that its a pain to deal with.