I think the Light / Dark mechanic should remain, however the restrictions on Demigods needs to be removed. As in Custom Match, any Demigod should be able to play on any side - it's up to the player to determine their own alignment - and any alignment should be able to play on the same side as any other alignment.
So, at the start of a new Pantheon Epoch you pick which side your playing for this round, and off you go. Whatever alignment you're playing for receives your Favour Points as per now, however as there are no restrictions on Demigods or on sides and so it's more for bragging rights than anything else. I like the basic mechanic of Pantheon, it's better than just a normal Match Making system, and I'd hate to see it removed completely, however I can see that it needs to be re-thought.
You could even just assign a player to a side... even/odd player id number, or just alternating (first is light, second is dark...) which would fix Light/Dark stacking.
Because, you know, Light or Dark winning is SO important.