Little Kingdom (and yes, that’s the actual name) is based roughly on the country of Liechtenstein.
Of course the country has a more ‘middle ages’ feel to it, so we’ll need to drop the population a bit. Lesse, lets bump it up to about a hundred miles square (I did mention it was ‘little’ right?) and most of that’s mountains, so we’ll go with a 40 head per mile population density (comparable to England in the same time period). That gives me 4,000 people which is a pretty darned small country. But lesse, we’ll assume that they have a standing army of about 5%, which would be 200 people. Now of course you can’t really fight off anyone with two hundred people, but no one ever tries to invade them so it works out well.
The Hounds, while not technically part of the standing army, function as a sort of cross between then Coast Guard and Navy SEALs. Their focus is on defending the borders, but they have a much less rigid organizational structure than the normal military or police force. Each Hound is an Army unto himself, and has the ability to recruit locals to his command as needs warrant.
Now when it comes to figuring out how many miles of border they have to defend, my brain starts leaking a bit because square miles isn’t miles squared and the math just gets more confusing from there. So I’m arbitrarily assuming that a Hound could probably manage ten square miles on his (or her) own. Which means we’d need at least ten Hounds, with various backups and support staff. So, erm, twenty maybe? Ten out on patrol, five running things and five folks ‘in training’? (And I am now amused, for lo, I can refer to them as ‘A mute of Hounds’ heh ^_^)
Now the percentage of magic users in the Little Kingdom is pretty high (82% or 3,280 people), but the number of powerful magic users is very low (0.001% of the population, ie. 4). The Hounds of Winter have an above average ability, but are not one of the four major wizards.
Admission into the Hounds is based on magical ability, existing weaponscraft talent, and a relatively nomadic personality (as they are out roaming the kingdom more often then not). They normally recruit from the military, although anyone is welcome to apply. They rarely lose Hounds, so the recruiting is relatively rare.
The horses, which are bleached white and then decorated in blue by magic, are the responsibility of the Court Wizard. They are just ordinary horses, abet of good breeding. So if they are away from the capital long enough the magic coloring their coats will wear off.