Can the neutrals be 'vassels' as well? So much can be done if we turn the neutrals into actual 'minor factions'.  By allowing them there own chance to grow & spread, plus the ability to have negotiations, neutrals would go from being temperary nothings to an actual part of the 'living world' - I have a couple posts that explain this better.

I have never really like the whole monsters attack/retreat once you territory envelops them thing. It allows players to build cities 4-5 tiles away from powerful monsters. The cities are usually safe for quite awhile  before their territory expands. This encourages players to spam cities off the start and cram those cities in the stupidest places, just look at the AI. It constantly builds on 2/2 spots when if they killed a monster they could have a 4/4. You should actually have to gradually clear the land of monsters before you carve out your kingdom, not just sorta build around them in a big rush off the start. Making the AI cities monster proof actually hurts them sometimes. I have seen a Hoarder spider sit outside an AI city and just eat their champions in a endless stream.

This sounds like an experience farming exploit waiting to happen.