Well, they're not particularly strong, so light armor if you can. Mithril or ashland glass if you have access. Maybe a good leather armor with a metal mail and helm overtop otherwise.
I usually organize them into smallish squads of ~4 who fight from towers or the walls, not mixed with other rangers because I like them to carry runebolts generally and mixing ammo in one squad is bad idea. Not big squads because there's less marginal benefit adding extra spellcasters to a fight beyond a certain point. If you're raising dead or healing probably 1 guy in a place is sufficient. If you're raining down death from a tower on a huge dwarven army then I guess more mages is better than less.
The range of default spells is roughly Sorcerer (10), Frostskald (5 to 20), Druid (20), Oracle (25). There's probably not a "right" or "wrong" way to deploy, it depends a lot on how you equip them.
I haven't tried it too much, but mixing into melee squads might be a solid play if you give them shields instead of dreamcatchers (or stick with the medicine dreamcatcher). And try to choose safe, or just plain un-enchanted, runebolts. Sorcs are probably the best option for the melee version with their short range and defensive spells, and wraithblade is the best melee weapon especially since (a) it's a longsword and (b) it gives the Wraithknight's Sigil spell (weakness to orichalcum and bloodsteel). Obviously you don't *have* to give them an arcane weapon anyway.
Most of the default and permanently-learnable spells are safe for friendly fire. Spells that come from runebolt projectiles or dreamcatchers in particular are not guaranteed to be safe. Raised Draugr are hostile to all life, Stormcrystal does AOE of all kinds of elemental damage. Multi-target runebolts can damage the primary target and nearby friends or foes, like Corpse explosion, chainlightning, wraithbinding, wasp hive. Single target runebolts like agony, polymorph, and poison ivy should be OK. Ice spells can be dangerous to non-frostskalds after long exposure, although again the more dangerous frostskald spells are the ones that come on equipment.
Some specific examples:
Wraithblade with agony runes is a fine choice for melee spellcaster.
Ivywhip with poisonivy runes is a good choice for friendly-fire safe ranged spellcaster.
Blood Kris with nova or corpse explosion for not-neccesarily-safe raising hell. Or magestaff with chainlighting or arctic gale.