mmm.... I didn't know, then maybe it could be good to make this a bit more 'visible' (and maybe more powerful). Some kind of inform for the King or the Council about the 'morale situation' of the realm.
You are informed every turn about the region you have an estate in. Sympathy can vary by region.
e.g.:
Regional Report for Montijo (1 day, 6 hours ago)
message to the lord and knights of Montijo
The locals do not understand how you can be allied with Caligus.
If Sirion was at war with Caligus, the stats would raise in Montijo. I think morale is mostly affected, maybe loyalty?