Q1: I've not been successful in spawning an army in the neighboring tile. The only thing that does this is the quest spawning... maybe you can work something with that, but I don't think so...
Q2: Are you not able to place the prereq of the faction in the gamemodifier for level ups? I thought this would work.
Otherwise, I do believe you can set up different building styles and have different upgrade paths after the first city level-up by using the RaceConfig files. Set a new city hub type and give a prereq that the player owns that particular city hub??? not sure if that would work or not.
Another maybe tie this to the prereqs of faction traits that one chooses for the beginning.
Note: I'll have to test this out, but I've got little time.