Houses dont take population, so you could build a house there.  But I assume you dont have any food available.

You can't level up a neutral town, I think they cap at 40 pop with no houses built and never level up, so they cant get to a level 2 or 3, or antyihg like that, you can build all the houses you want, but they won't "level".  Kael, you should hire me man, I know the game

They don't have borders anymore, inluence ones.  They can be completly covered by another's influence now, but they work the same, you walk up to them and can buy their gear even if your influence covers them.  But, there is only one minor nation now, and although they sell unique, and cool armor, it can only be worn by males of the human "Men" race.  But they also sell longswords and wood shields that anyone can use.

But, I have not ran into them in the new patch yet, so not sure if anything has been changed.

Edit: Oh, you meant captured ones, I think they just get completley destroyed, but I have never attacked them personally.