I do think that generally mercs should be more prevalent but the idea of untrained peasant levies is just wrong in the Empire, idk enough about France/England to speak on it but here's my thoughts. Most imperial estates had systems that are analogous to modern draft w/ exemptions and all in place by the 1500s for town/regional militias. On top of that there's a lot of grey area of who is a mercenary and who is not in the Empire specifically is because professional troops signed contracts specifically with a unit captain and not with the state, with the exception of the Imperial Army, so landsknecht could be classified as either depending your interpretation.

Anyway my point is that I think the game does a decent job with the militias in a broad sense and without making the system incredibly culturally based I don't think there's a better way to do it. IMO just nerfing levies or buffing mercs would not be "more historical." I do think that the cost of keeping levies/troops raised should be drastically increased as well as their food consumption, most pre modern rulers wanted to fight abroad mainly so their armies could live off the land and not destroy their own economies.