So I'm with the whole group of nine knights trying to get to Umaril, and 4 of them or so have already died, and I realize I'm going to need more health potions that I have. If I leave to go buy some more will the AI keep fighting, thus killing all the knights, or will it "pause" until I get back, and the rest will still be alive to fight on?

the enemy "knights" never die they just get back up , over and over and over and over...

so what you might wana do is...well reload from before they die and slide the difficulty bar down so your men can at least survive till you can get back. OR slide it all the way to the left and do the end quest killing all in your path so your men wont die. and finaly another option reload from before you attack teh place go grab about a million heal self and compainon scrolls and vwola. no dead troops and no dead you.