And rulers do have to live somewhere... And that somewhere quite often was not the kingdom's biggest city, it was often some small town/castle in the middle of farmlands. I wouldn't see why they shouldn't be able to take up an estate in any region, as long as you make them tax-exempt to make it clear that they aren't subjugated to anyone.
This is actually a very interesting suggestion. To give the King the ability to take for himself any vacant estate, completely lord tax free, which cannot be resized by the lord. Though it would create some conflict between the given lord and the king (not that such is necessarily bad), it would solve the King/Knight dichotomy without forcing him to be also a Lord and a Duke. It would also require him to be kicked out of the estate if he loses/gives up the crown.
And what next? Are dukes also not going to be part of armies, because that marshal is a mere lord and therefore inferior? And lords too, if the marshal is a mere knight, and therefore inferior? May as well have nobody in the army. It's a slippery slope, because it's not any more valid for rulers than for dukes and lords, imo, as all of them appoint themselves to the army as they like and have the power to change armies or found one themselves if they wish.
Simply give a similar message to the suggested for the King to any Duke or Lord that joins the army, and when displaying its members make a clear separation between Knight members (sent by others to serve) and Lord/Duke/King members (voluntarily participating).
