EDIT: Although I think that we need to have a strong military for both offensive and defensive purposes, so as to defend our foreign trade interests.
Defensive first, offensive second
We don't plan to launch an offensive anytime soon We pan to survive a massive attack from one of those - Maher\orcs\justicars , That's why we need to dig in...
Improving our transport network and attempt to become a tradecenter is just a way too boost our silver income( useful for everything) and worshipers income (useful for everything) That's why we need to become not only a military fortress, but comfortable and safe looking fortress, to attract migrants and traders
For the offense... I'd focus on the fortress, flying fortress armed with even simply catapults, guarded by our dragons, Tiberius, firejackets and whatever airforce Krait, god of air, can create will destroy land based armies with ease. And we may add so many interesting manarackpowered weapons to it ... Why bother creating huge land based army when you can bomb enemy away? While land forces sit behind the walls (defense, again) and waits for an order to mop up the bombed enemy.
The fortress is our freaking deathstar
Aiding allies? Again, - the fortress over their enemy... Or, if fast reaction power is needed - werewolves and dragons, they are fast and can provide a punch