There is no way you can create "new" races as such. There are plenty of mods however that create faux new races, such as "High Elves" being just elves with an altered race name, or "Ogres" which are infact a none race.

You could consider this however.

Completley overhaul the current twelve races into twelve new ones depending on your canon.

The obvious ones to go are Highmen, Azracs, Frostlings and maybe combine orcs+goblins into goblinoids. This frees up four slots potentially.

You can use the language editor for AOW2 to rename anything in AOW1, so your catmen could become azracs. Duergar could replace goblins etc. You won't be able to change the base allignment of these races.

Consider subraces too. For example Tieflings could be a human subrace perhaps?

The 120 units thingy is easy, just keep adding new units and a empty line should appear. failing that just copy and paste blocks of units and delete them all except for the one at the bottom.

AOWCGE is best for importing/exporting units. Then use photoshop.

I was working on a huge project like this years ago. But it all went wrong at some point. If I have the files still I can put them up for download. There were many minor changes such as colours and numerous imported sprites.

Currently working on something similar here; I'm replacing the 12 AoW races with 8 new ones. However, I have the problem that certain properties are hardcoded for the respective race indices:
- initial race relations
- terrain boni/mali
- map and text colours

Race relations I can somewhat work around, as I have fewer than 12 races and the relations don't depend on alignment at all. Also, in the campaign you always have friendly relations with allied races. The terrain boni/mali are a little annoying, but they're quite minor and many players may not even know about them. However, the race colours are a pain in the ass because the relations pretty much already determine which race goes to which index, so I end up with Highmen-white for the Lizards and so on. The colour setting in DevEd has no effect, and I can't find the colour codes in any of the binary files. Any idea how I can work around this?