Can you create single player battles with more than 2 armies?
Yes! That is already supported in the game. You can have a single player campaign battle between 3 different armies--or 4, 5, or 6, for that matter.
Can you make different armies ally with one another?
Yes! What's more, the AI knows how to cooperate with allied armies, and will do so if you set up multiple armies in an alliance with each other. (That's true for both single player and multiplayer, incidentally.)
Can you give human players control of more than one army in single player?
Yes! If you want to create a mission where the player fights alongside allied armies, you have the option to make those armies CPU-controlled or player-controlled. (You can also make enemy armies player-controlled if you so desire.)
Can you make it so a campaign's plot branches based on whether a specific character survives a battle?
Yes! That's just one of the many, many cool things you can do with the scripting system in Telepath Tactics (and one possibility for how the main campaign could branch if we hit our fourth stretch goal).
Is it possible to have certain characters get player-directed stat gains on level up instead of randomly chosen stat gains?