What about giving the ruler a personal sort of "realm upkeep" cost that doubles (or something) with each duchy. The sort of thing where with one duchy it's irrelevant, but with 3 he needs to start taxing the Dukes, and at 4 the Dukes actually would make money from succesfully departing from the realm. This is a stick solution, but I feel the issue comes from the "sweetspot" that is being a Duke in a big realm, and the lack of reason for Emperors to turn crazy megalomaniacs.
But with the current player distribution it might not be the best thing to encourage smaller realms. It's boring to be split into <20 people entities, depending on the people of course.
