Id like to propose an idea on how to give more diversity and depth to both minor factions and dipomacy in general. lets first address that all main factions in the end of it all are your enemies who will compete with you for dominance in the game. with this in mind id like to suggest the following ideas...

- minor factions are dotted around the map ( different races/ alignments etc...) they dont expand their borders but they do develop their city and technology to compensate for it so they are not weaklings either. all of them being unique.

- all minor faction cities are unique looking according to who they are as a race.

- all minor factions have just one city which is strongly fortified to ensure they play a role in how the game unfolds. their surrounding influence area doesnt expand or retract even if a player or an AI has city pushing culture nearby.

- all minor faction landscape in their influence zone has the unique look to that factions culture.(ie demons or undead have nasty looking dead trees with  green fog and lava and hell ground fire, angels have lush green plains and hills  with romanesque columns  and clouds etc.[ alot of diversity can insert here to add the fantasy theme)

- diplomacy can be used to befriend them but with consequences (ie if you make friends with elves mini faction the orcs minor faction where ever they may be will be hostile towards you)

- alliances with minor factions will produce over time stronger bonds of friendship giving the player special otherwise unobtainable rewards ( unique spells and or not limited to unique weapons and a unique champion not obtainable otherwise [diverse unique rewards of all flavors can be insert here]).

-unobtainable techs can be learned from mini factions (again more depth to the game) with reputation requirements.

- arrange marriges between your faction and a minor faction option at a certain lvl of reputation.

- all minor factions have an opposite minor faction that they are mortal enemies (ei elves vs orcs, angels vs demons, dwarves vs goblins, faires vs trolls, etc etc). 

           + above rivalries adds an intricacy as that besides your competition vs other IA factions the mini factions also war amongst themselves     

- highest lvl of reputation and to obtain the the minor factions ultimate gift is to eliminate its rival mini faction. ( to compensate for the lvl of difficulty the reward should be worth the effort)

- faction reputation could be a visual meter of sorts of your progression with the faction  ( ie like Wow gaining reputation of a faction from neutral to friendly to allies, revered, exalted something like that). this way after you meet a faction you can always check your progression or stance with them as a nation.

- the longer the player is friendly you gain a small amount of reputation with your minor faction friends but doing quests which are given to you by them will add extra chunks of +rep. 

- unique notable locations also found within the minor faction zones too (could be intresting?)

- AI factions can and should strongly want to seek alliance with minor factions to exploit its rewards.

--summary--

above is just a brainstorm i just had from reading the post on hero quest lines today. i can only think that the biggest task of this to be made part of core game in FE is to design each unique faction and have a story behind them. unique buildings,races. the spells they would offer at whatever tier of reputation they are with the player. unique weapons they could offer and the special champion could play key roles in assisting players to make incursions into the FE special regions dominated by the elemental lords that own them. i think this will give even more flavor to the map while adding diplomatic intricacies. i submit to the community for open discussion.