You should be able to invite villagers to join your party and fight with you. In your party you could have 2 villagers, 2 magnus or 1 villager and 1 magnus. You should also be able to gift villagers armor, clothing and accessories and they would wear what you gift them. Rune Factory is a great example of a game does this.
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Meh, imho Magnus > Peoples. To each their own.