I built up a small unit and went down to level two. There I hit giant ants.
After defeating those I ran into a well that I was too hesitant to use. Then a demon gate that I had to seal (after fighting the first round of spawn that came out of it). Sealing it took building a shrine near the grave site of my dead soldiers, recruiting a cleric, and then convincing that cleric to sacrifice herself (along with a ton of diamonds).
Depleted in both soldiers and coin, I foolishly opened up another room on level two. Shit. An XXL monster village. The goblins there were strong (50 STR) and worked their way up, defeating my remaining 6 soldiers (45 STR with the Kitchen in play), overrunning my hold!
I'm going to start naming my Dwarf Holder and maybe even the soldiers, clerics, etc. That way it will hurt more when I lose them.
FYI, the only rules mod I'm using right now is that I redraw only at the end of a turn on which I drew an Ace. That puts more variety in the game and reduces shuffling time.