Why shouldn't you be able to declare a realm lacking followers as faithful?
Imagine just the ruler converts– I can see a religion declaring a realm faithful based on a single high-profile conversion. See "Clovis" for details.
And that would hardly be an exploit. The puppet state would gain from the priests, sure, but the main state would be gaining enormous power and sway over the other state– which would incentivize the smaller state to get some priests and elders so it can have a little control of its own destiny.
