Greetings, knowing that diplomacy is in the works now, I decided to sum up my current experience regarding this field and put up some (maybe inspiring) thoughts. I have played several games up to now, both on normal and challenging, which I think are the most frequent difficulty levels. My primary interest is strategy level (act II and III), not RPG elements. I try to refer to Galciv though, as it is obvious inspiration point:)

1. AI declaring war on me

Maybe it is a bug, but I find "appeasing" AI incredibly easy. Many times AI declared war on me and with just a few (1-5 worth of ca 300 offer) points of diplomatic capital, I was able to convince them to go for peace again, in the same turn. This is sad and it makes the game a bit pointless - because I cannot realy lose. I think that best and simpliest solution is introducing "they do not wanna talk with us" mode aka Galciv or increasing peace price in first few turns of war substantially. That way AI can at least do some damage, before being paid off:)

2. AI threats

I am bit unhappy with AI instantly declaring war after I refuse to pay them off. It is ok with me being kingdom and AI being ten times stronger neighbour empire, but it feels strange if we both are kingdoms or approximately the same strenght. I liked Galciv system of "gradual pressure" much better:) And BTW, what about coounteroffers? Mayby I do want to appease them, but not with gold and rather with iron, dipl-capital, city etc...?

3. AI declaring war irrationally

Sometimes, AI tries to blackmail me and subseqently declares war on me, even if it is paralelly in war with much stronger foe, I am in peace with (or even friend). I.e. Magnar (power level 200) was in war with Altar (150) and declared war on me (Tarth - 100). This is in fact suidical, as AI was maybe able to handle Altar, but not us both. AI should in fact do the pretty opposite - try to appease me to to go to war to chew out a bit:) Solution maybe AI treating factions together (based on power level), like armies in army groups, when deciding, whether it will go to war. Aka I can take this 120 strong, but not together with his 150 strong friend.

4. AI intrigues

I liked pretty much in Galciv AI being sometimes able to pay someone stronger to beat me up, creating pacts etc. I have not seen such behavior in FE. Better coordination between diplomacy and army branches would be nice as well - maybe AI can start sending armies in advance, when some its internal scoring model determines "I want to wage war on this one"?

5. AI asking for peace

Again in galciv, AI is able to ask form peace, when it got bloody nose. Not so much in FE. As far as what Ive seen, AI will give up when it effectively lost, but it will not try all possibilities BEFORE this point (asking for separate, well paid peace, allying etc.). That would be really nice to implement, as it gives the game great flavor.

6. General & balance (hope I have not missed something that is already in the game:))

I think more factions and cities flavor would be nice. Mayby regarding cities, why not having improvements suspending each other? Like troop buildings suspending magic, research suspending trade etc. This in fact was in galciv done through limited amount of space on planets, why not to force player to tough decisions with similar mechanism here? You wanna build up troop traingin city? Fine, but you cannot build advanced magic buildings then...

Roads - have you thought of level 2 roads late in the game? Maybe useful...

So this is my brif feedback on diplomacy. I know you guys have some nice surprises prepared, I look forward to next version!