I really don't see how this list could be underpowered. It's pretty much the High Elf list with a few tweaks and a whole lot more options from the forest spirits. We have the same shooting power, the same infantry (plus better options, and Wardancers), the same cavalry (Wild Riders lose 1 save but gain 1 attack, for 10 points less), the same flyers (but slightly better with a shooting option)- all we really miss are the Chariots and the Dragon- and everyone hates the Dragon anyway. The Treeman is pretty similar for less than half the points.
Waywatchers are basically the Bolt Throwers- they lose a little range but gain their special deployment, and they have 1 less shot but gain +1 to hit and -1 enemy armour save. Like High Elf Bolt Throwers, they're not going to dominate a game- but they shouldn't. They're a pretty awesome support unit able to disrupt enemy stands by pushing them into each other, or could be positioned to deal the extra hit or two required to kill a stand. At a stretch they're also better in combat than the Bolt Thrower.
The only real downside is that some of our units can be commanded by Ld 9 at best, including the Wild Riders- but then our general doesn't get hit with the extra points cost penalty like the High Elf one does.
We can't quite spam magic like the High Elves- other than with Tree Singing- but we have a movement spell, which is pretty much the best spell possible in the game (ours is slightly limited by the charge requirement, but that's really the best use of it anyway). Tree singing can also work as a unit movement spell under the right circumstances- possibly even giving a charge.
