I don't understand line of sight in combat, some units seem to ignore it completely even though there's nothing on their card to specify this. I had a battle with six land units in the last era of the game and seven ships. My ship can't shoot beyond one tile, which make no sense at all, but the aggressors can shot four tiles away through terrain that that unit can't see. Is there something like a spotter that gives other units indirect fire, or is this a cheat for the AI on harder difficulties? Also is there a mod to disable the flag, that thing is always in the worse spot available in any battle.

I personally hate line of sight, it makes xbows worse than archers. I understand the logic behind it, that you need a clean shot with no units between you and the target, but i think that the result on the game battlefield is not either fun or realistic.

I just had a battle on a city, where I was defending and a militia unit in a hole was able to shoot a pikeman on the other side of the walls three tiles away. While another militia unit couldn't shoot a Dragoon on a hill, two tiles away, but could shoot the musketeer next to the dragoon, also on a hill, no trees or any units in it's way.

There is a red hex indication on the target you can hit when you check where to move in combat. No-line of sight is of course white hex. 

The LOS rules in HK are very restrictive. This makes units with Indirect Fire extremely powerful - it sounds like that's what you were seeing, OP. Ranged units without Indirect Fire are hard to use effectively, particularly the midgame ones like Crossbowmen (who take a combat penalty) and Arquebusiers (who can't move and shoot in the same turn).

It would help if LOS-restricted units (like Crossbomen) could fire over units if they were at a higher elevation, or maybe within fortification, to represent the artificially-granted elevation of battlements.

I can get crossbowmen not being able to attack from behind friendly cavalry on flat plains, but they should be able to shoot over their allies' heads from a hilltop or from city walls.