I think you are missing the broader implication here. This (and many of the other new proposals) would make larger religions more powerful. Powerful enough that if you were inclined to do things strictly by the numbers as you see above, then you would decide you needed just one religion between the realms. And if you didn't, you would be at a significant disadvantage.
I don't think that's true.
The key point here is that a realm can be declared "faithful" without having anyone in it of the right religion. I think that's wrong, and I think it decreases the incentive to have big religions. A big baddy with a state religion wouldn't need to convert its neighbors; it just needs to declare them faithful and bam! your priests can act more effectively.
To give an in-game example, SA shouldn't able to declare Barca faithful and then send its priest laud Barca in Aurvandilian regions, even though that may serve its interest. That's a job for ambassadors; if you want priests to do it, you should actually convert Barca first.
The "declare evil" part is less likely to be meta-gamed like that.
I think to declare a realm faithful, you need to have some sort of proof that the realm actually is faithful, and there's no easy metric for that.
