Quoting mqpiffle, reply 16The city-style is the same as all of the Empires, so I don't really understand what the gripe is there.
Yep it works the same way as all other races in the game. If you create a Kingdom of the Dead you will have human peasants. My original post was not to bash Stardock in saying this is broken. It was a "it would be nice if we can have this"
But if you meet Vergas for the first time as Morrigan you will get to hear his comments about the fact that everyone in your cities is skeletons.
And comments from Capitar about everyone being dead.
Plus if you read the flavor text of Morrigan it will mention that Caleb city is the buried city where Morrigan and her Risen emerged from.
And you do not expect Resoln militia to defend the undead cities 
Everything I have read ingame basically point to undead cities being ehm, full of undeads not trogs 
Shopkeeper is a skeleton.
Magic Shop is a banshee.
I fought a matron which was part of the hellknight army defending a ruined fort..... and her attack power was 0 so she couldn't do anything.
Feed/Elegy abilites being available to still breathing and alive heroes I dunno elegy but uh feed... They fed on bones of my undead army to stay alive. Faction ability sure, then how come my Gilden heroes that recruit heroes from Mancer race and etc don't have Guarded Strike then?
Plenty of undead troops from morrigan sadly have no flavor text but you can see most of the flavor text if you can find a hellknight army in the world.
If you get access to horses and check it out in the shop, it will be shown as undead horse. But horses and warboars in Undead err Yithril run undead cities is shown as still alive.
I think Stardock went oh shit, todays' halloween quick release it even when we not done yet!
The fact that Morrigan the risen is a empire faction simply doesn't excuse it from it's cities being run by trogs.
I can see why Kingdom people will look similar.. well duh? 
But Empires.. they require tad bit more work on graphic art otherwise it'll get really annoying just looking at them, no wonder why I raze every single empire city I capture.. its just that I never realized it until I tried to play as undeads. Lots of Empires look different from each other.
What I do to empire cities most of the time when I capture one, even when it's a level 5 with every improvement built. I rushbuy a pioneer then raze the empire city to the ground and build a kingdom city on same tile if I liked the location with kingdom pioneer even when it came from a empire city that got razed.