I was thinking about hiring people and how that should give you xp (might be the bioware/mass effect fan in me), since I always have a champion in everyone of my cities that has a high charisma but never levels up (is weak). I thought it would be cool to have them level up after persuade so many people to join my side. 

lairs should work like in fall from heaven i.e. they should spawn monsters until cleared and should also be protected by powerful guardians.

take the bandit camp for example:

1) should have a small bandit party with a bandit lord as their leader protecting it

2) should constantly spawn more bandits that roam the countryside

I like this idea, I think sovereigns should get xp for doing things that you suggested and a small bonus if the sovereign has a applicable history.  

I like this, I would couple this with another idea.

I think more powerful monsters should pop up as the game progresses and shouldn't the magical shards attract powerful monsters? 

I tend to agree; I usually end up with a couple of powerful NPCs and my Sov, and then any NPCs I encounter I kill because leveling them up is simply not practical.

Inns having repetable quests (kill quests, escort quests, etc.) from the numerous Inns would work well (and remove the need for a million Inns in the world) as well as the aforementioned Den idea from Fall From Heaven would work pretty well in terms of allowing NPCs to be leveled up.  It be best for balance to have NPCs only earning XP from monsters within, say, 3 or 4 levels to ensure you don't camp the Den with one NPC and level them constantly.

In any case, it's certainly something that needs attention in my opinion.

If you remember, in MoM each army get 1 XP each turn...