I posted elsewhere a response to this issue.
Several suggestions: BTW I am playing ver1.0x as i can't downkload patches to ewom)
1) Actually have the soverign expend 'essence' to create / build each settlement. (the land doesnt support life, remember?)
2) Have a penality that increases with each new settlement established. BUT also: have ways to minimize (not eliminate) this penality. One key way to minimize penality is to have a member of the soverign's line (spouse, children, grandchildren) loacted in the settlement.
Also, consider that many pre 20th centruty wars were noble families feuding with one another (wars of succession, war of roses, etc). So, allow that a few scions of the royal family, that were raised in someone elses' court, (one parent is from another soverign's realm), migth have more loyalty to one paretn over the other (one soverign over the other) AND inthe event of war, might 'switch sides, doing a little sabatogue on the way out, or 'stealing something' on the way out, or taking some troops (from the settlelent) out with him/her. Perhaps, on very rare occasions, this scion is popular, so the entire settlement, intact with troops,switches sides.