If you're married to the god of death being the god of undeath then a solution may be to de couple death from undeath. Thematically your awakening is breaking down the gates of the underworld, the more ancient power you have the more undead you have at your disposal. However, since the souls of the dead are pretty much infinite adding more souls to the underworld does not increase the number of undead avaliable to you, as they go straight to the underworld. This prevents your classic zombie horde but means you actually have a resource to manage rather than snowballing by creating your own resource doing what you're already supposed to do. It also opens up a couple of ritual ideas, an agent opening a second gate to the underworld would provide you with more undead to throw around but be comparatively easy for the heroes to close. An agent putting up a barrier between life and death would allow you to play as the old broken undead old one who snowballs for a while, but generate a massive quest, something that makes literally every hero turn up to try and stop it, drops clue tokens everywhere and makes your agent certain to be hunted down.
Just my two cents. Create an old one of death and undeath but keep the two mostly distinct and unable to feed into each other. (the idea of killing a specific part of the animal or human population and then raising them back up again seems really cool to me, how do you deal with undead locusts which never stop eating? Are the undead sages you made going to be discovered and hunted down, or is their knowledge seen as to valuable for them to be destroyed?"
This is also a very interesting interpretation - part of the difficulty for me in introducing a concept of the underworld is I want to truly integrate it into the game - it also may trod a bit on the feet of the Gods. But I'm going to let this idea percolate for a bit, and see how it feels. I'm trying to purposefully not think about the Death God right now (because it's a tantalizing problem) so we can focus on more fundamental mechanics until we want to tackle him again, but it's good to try and figure out how these other implementations may work within our system.
While I understand that at this point your time is much better spent elsewhere I thought it might be important to stress that the important part of the idea is to decouple the number of corpses in the world from the power of the old one, why this is the case (theme) and how this is the case (mechanics) is somewhat beyond my ability to speculate- though of course I tried!
Well, this interpretation of Death is basically something like a necromancer I assume. It is kinda generic and not 'Old One' material... as its objectives of killing everything for *insert generic death god/thing reason* is all there is to it...
But if you insist, I agree with Mithras, decouple its eldritch powers from things dying.
If there is an issue of balance, generic undead made from non-combatants are near worthless fodder that will basically be a waste of Mana(or whatever you use), most likely a last ditch effort, use em to screen an agent's escape or something. If they have no experience in fighting during their life, their afterlife will be the same.
A random dead peasant isn't miraculously going to get a sword or even armor out of nowhere either. Maybe they can come with a pitchfork or some other improvised weapon. (Add in the restriction that undead troops cannot get better/gain experience.)
Nor can the undead be easily fixed. Broken bones are broken bones, patching that together is basically life magic, most likely an affront to Death. So even if you do try to fix the dead, you and yours won't be proficient at it... Goes with the idea that blunt weapons are indeed, super effective against the undead, break their bones and they won't come back up.
Otherwise, it is pretty much generic snowballing of an ever big horde of undead that only ever fights enemies weaker then itself and comes out even stronger each time as it both 'heals' its own and recruits the recently dead fighters, till it hits the tipping point. Well, that'll still happen, but it slows it down significantly...
Meh, Necromancer/Underworld Death isn't really interesting as Farmer Death and Back-to-Nature Death.