I've noticed some serious balance issues when conquering foreign faction cities. The problem is easy to describe but hard to fix I think.
The underlying issue is that kingdom and empire has different types of buildings and the game doesn't really track "race" of a city.
Once per settlement buildings are possible to double. If the conquerored city has +1 to research or +1 materials, you can add the your own factions once per settlement building to the city. The same applies to higher +25% type buildings
Special resources can be used if already connected when the city is conquered, but can not be build later.
You could solve these issues if you could only build empire buildings in the empire cities, the problem is then that the research trees have been so separated that the kingdom doesn't have access to empire buildings. The other option of converting all buildings would on the other hand remove everything special about conquerored cities.