On the subject of the 8 Hand Limit, no I don't think it is balanced when it comes to stopping a Player from dropping huge armies all at once. Anyone who's smart can abuse the pause option get around that anyways. I know it was definately possible in both DK1 and DK2. It also adds an advantage to the Hero Side as they have smaller numbers.
However, an 8 Hand Limit does offer more balance compared to DK2's 64 Hand Limit. There's other aspects of the game that it effects other than battles. Let's use the prison for example. In DK2, all you need is a 3x3 Prison. Using a 3x3 Prison, you can gain up to 66 Prisoners at one time if you wanted to.
Having such a large Hand limit does offer other perks that are quite abusable. Therefore, I think a smaller hand limit should be in place in order to prevent this kind of abuse.