I would hope you would have some more options. I'm at Ch9 in my Lunatic run, and both Krom and MU are promoted and about as competent as Frederick, aside from his Silver Lance and flight. Seems to me that as the game goes on, you can train more and more characters to catch up and help out, unless you choose not to and go the boring tiny-team route.
And just as I noted on Gamefaqs, I really am inclined to think that the tiny team played just as much of a role as the Nosferatu use in trivializing the game, even if it wouldn't have been enough on its own. So there probably is more to learn here: Sorcerers have without a doubt the best combat in the game, but they may not be as broken on less-boring full teams on Lunatic.
On the other hand, on HM, they're absurd no matter what.
On Lunatic, Sigurd's SpotPass team contains this guy:
Great Knight
LV20
HP 80
Str 51
Mag 4
Skl 35
Spd 33
Luck 32
Def 45
Res 9
Move 7
Sword A, Lance A, Axe A
Silver Axe (+8 Mt, +20 Hit)
Vantage, Luna
His battle stats are:
Atk: 75
Hit: 163
Crit: 17
Avo: 65
The others aren't any less scary. Two of the Paladins have forged Brave weapons.