This weekend I played an Epic battle scenerio, using two boards. My friend and I started with only the Flagbearers, leaving the extra "hit point" minis off the board. All units were considered to be at max hit points. When a unit does take damage we used a normal 6 sided die to represent the damage it has taken.
For me, the setup time has more to do with getting the terrain in the right places and getting the right type of figures in the starting hexes. Once you do that, adding more of the same type of figures to the same starting hexes wouldn't save me much time. But it helps to have your figures well sorted by type.
Also, I'd be concerned about knocking the dice about by accident when moving the figures and forgetting how many figures were left in the unit. But if it works for you, I'm good with it.
But, it's a good strategy if you don't have enough figures to deploy complete units.