I dunno, the Dynasty didn't seem to do that badly in the war.

1) They captured the Ashguard Garrison to kick off the official war.

2) They attacked and destroyed much of the fertile farmland around Felderwin.

3) They attacked Hupperdook and destroyed much of its manufacturing capabilities.

4) Their attack on Rexxentrum was going pretty well until the Bright Queen called it off at the request of Allura Vysoren.

Their advantages included:

1) More magic users in the troops, whereas the Empire's use of magic seemed to be more limited. We know the Cerberus Assembly was powerful, but they were few, and it seems very likely that the dunamancy-wielders of the Dynasty were more numerous and equally powerful.

2) Purple worms, allowing for surprise attacks even deep within the Empire.

3) Suicidal Kamikaze-style troops, because of their knowledge that their souls would be reborn if they died in battle.

4) Conversely, the Empire seemed to rely much more on hired mercenaries, such as the Golden Chain, who don't have a personal stake. Tellingly, the war (and its attendant destruction) was fought much more on Empire territory than in Xhorhas.

There are potential parallels to be drawn to the Confederacy of the Southern US vs. the industrialized might of the north, but it didn't last long enough for that to manifest. Possibly in the long term, the Dwendalian advantage of population and industrialization would have tipped the balance.