The only penalty they should have is no sovereign/ maybe no magic unless they somehow get a magical hero.
I agree with this post. Perhaps allow a toggle between having the minor factions having the ability to expand like a "normal" (not having a magical hero that can move mountains and smite foes with bolts of thunderous lightning!) civilization. Kinda like independent city-states that explore/expand, with the only real difference between major/minor factions being that the major factions have magically imbued, semi-immortal heroes to hold their hand; whilst the minor has no such luxury.
Though not all of the minor factions need to be entirely interesting and/or unique in one way or another, but let us not have them all be completely mundane either. Perhaps a group of slaves escape some sort of labor colony of the Empire and decide to create a city all their own..Or maybe a guild of merchants find a nice spot for a city who specializes in trading? Nifty little things within the world that can occur through random and/or triggered events that keep the world breathing in a way that really makes it feel alive. Just some ideas off the top of my head.
Indeed. That's all I was getting at back on page 1. I think the majority consensus on this will be that minor factions need to be considered a little more then just "Minor" or they'll turn out as just "fancy goodie huts". If they're going to be in the game at all (which honestly does kinda go against the whole ruined world thing) they need to be able to have a purpose all their own. They need to be able to build up at least a little bit so they can prove to be worth keeping around. I've always preferred the type of "Minor" civilization/empire/faction in whatever game I was playing that would actually have a use. Diplomacy (known as Politics in the real world) can have much greater uses and can actually allow these Minor factions to have weight. If they have at least a little bit of power behind them you can have "proxy wars" through them against your enemies or even allies without breaking an alliance.
Minor factions need to be able to spread out some and gain power, even if it is at ten times a slower rate then the player or standard AI Factions. The fact that they would spread so much slower and Not have a Sovereign (maybe even not having a hero) would be all that's needed to make them "Minor". Without a centralized form of leadership no civilization or group or settlement would ever get very far. They wouldn't have someone to say "Hey, lets go build another colony over there" or to say "We should Ally ourselves with this strong Empire over here". Instead, their form of government (or lack there-of) would have them looking to the "Village Elder" or "Town Mayor" for guidance. In Elemental's case since Frogboy is giving minor factions these "guardian units" then if the "guardian" has a high enough Intelligence perhaps in Diplomacy you'll be talking to the "Guardian" directly. I think that would be pretty cool.
I also wouldn't mind seeing Minor Factions that specialized in certain areas. Perhaps one type of Minor Faction has ancient secrets of a lost form of magic. Perhaps one minor faction knows how to be better miners than their neighbors. If they each grant certain bonuses (think about resources in space and building starbases in GalCiv2) and the player or Ai can only get that bonus by successfully bringing the minor faction into their Empire/Kingdom, this gives yet another reason why the player or AI shouldn't just wipe them out. I think that would be pretty cool as well.
So, we don't need Minor factions that are as fleshed out as normal AI Factions. They wouldn't need as advanced an AI as a normal AI Faction would, but they need to be more then speed bumps and they need to be worth keeping around or they'll just get mowed over or seen as fancy goodie huts.