If you had a third warlord, you could build trained units as a source of income - who needs markets when your paid mercenaries instead pay you?

I think you should go make a game with a bunch of custom factions, each of which are headed by a Warlord Sovereign. Who knows, maybe you could even get your troop upkeep costs down to -200%, where they are paying YOU twice what you used to pay them for the privilege of fighting and dying at your command.

I think that the Mercenary Camps and the Knights of Asok are useful after all!

I was under the impression that everything percentage in this game was additive 

It surely does!

Evidently, what happens is the brilliant scientists of that defeated nation fled the capitol when you brutally razed it to the ground. Displaced, disenfranchised, and without the resources or wherewithal to carry on their groundbreaking work (which was ultimately unused by their layabout supreme leader, more interested was he in wasting his time experimenting with Juggernaut genetic engineering and organo-plasmoid Tarth camoflauge), they decide to join your burgeoning empire, keen to carry on the work and knowing that, though you are a cruel and merciless Sovereign who will inevitably demand for them to turn their efforts to even greater war machines and deadly weapons of mite destruction (WMDs), you respect their scientific integrity enough to pay and treat them well.

That, and it's better than being devoured by a wandering dragon.

Many things are, many aren't.

For instance, the Accuracy and Dodge bonuses from the Lucky faction trait are multiplicative, as is the Dodge bonus from the Shrink spell, but a lot are additive when you wouldn't expect.

For instance, I just noted that the Vital Strike series of bonuses are additive (on crit chance, at least; there is no visible stat for crit damage). I'd fully expected them to be cumulative, like with Reap!