Hiya! 2 observations here, after playing a handful of games.

First, about sovereign's children: it appears that daughters ONLY inherit mother's traits/histories and sons ONLY inherit the father's. Problem: AI sovereign spouses as they set up currently have no special abilities/backgrounds, so their daughters also have none. Seen as daughters are what your faction gains from arranged marriage with other faction, you basically receive a plain hero with no abilities (albeit with essence). Their daughter also doesn't gain any special abilities. 

With Pariden, Resoln and Tarth the problem is a little in reverse, their sons are traitless.

Second, I have not observed AI sovereigns arranging a marriage for their children with other AI. Does it ever happen? I'm thinking it should in the interest of diversifying the faction gene pool, (read, inherited abilities of other factions ) and providing more marriage options. I had a game where I married a grand-daughter to a grand-son (grand-daughter joined my faction, grand-son remained with other faction), which was kind of err...