In regards to giving the ruler more power, I think that the most likely cause of intra-realm conflicts is envy at those who have positions by those who don't. There's no need to fan the flames that way.
But there should be some incentive for people to actually get their act together and try to win as a team, rather than try slitting each others' throats. Like, that "Too Much Peace"? It doesn't go away if you fight amongst yourselves...That has to do with actual battles, yes.
Ok, so how do other games do it? I haven't been active in many browser-based MMOs, nor really those team-based strategy games. I do have some experience with competitive guilds/clans in games like...WoW...yes...
I've also been a part of competitive SCBW, although that's not exactly the same. But the point of maintaining cohesion in such groups was strong leadership, clear objectives, and clear ways to get to that objective.
I remember faintly how in SC the clanleader would review our records and give us a win loss ratio goal, as well as a target total games played. In BM, the council has primary responsibility to set objectives to send out to the dukes, lords, marshals, and knights. What would these be?
For the ruler, it could be as simple as: I want to expand to X more regions"
Judge: I want to see more regions at Core control (Yeah, I guess that is part of his job description)
General: I want to see everyone in the armies with full cohesion units.
Banker: I want to see more efficient food spread.
It doesn't need to be something that big, but I think a lot of the time, it really helps to know just what you're supposed to do, even if it's not the big picture, end goal, ultimate plan. For my SC days, we never thought about how we had to win out TSL or get everyone up to at least A- rank. It was the small things, like improving mechanics, getting a build order imprinted, and playing against equal or higher ranked opponents to hopefully gain wins.
In much the same way, leaders of a realm should definitely be more involved with setting goals for the realm, such that everyone knows what they have to do. They should also be more attentive, because if you recognize someone who might not be that talkative, but might yet harbor a hidden darkness in his heart, you may yet dispel potential seditious thoughts and actions by being observant and saying "Good job" to someone you see doing the right thing. Send a personal message to some people who are doing well, saying how you appreciate their efforts. It shouldn't only be them seeking you out. As a leader, you are responsible for keeping your followers happy. Among the most effective ways to do so is to acknowledge their existence.
Next, what about the realm itself? It's good and all to have goals, but what good is a few more regions anyway? To many knights, there can only be one lord for each region, and if they're not chosen, what of it? That's where I think there should be something tangible, of some sort, for being a successful realm. I know, I know, realistically, there are no such "prizes" for winning wars, and BM isn't a game you can win. But you can certainly gain things in it, and I have a feeling that such intangible and distant things as "glory" and "victory", "pride", "honor", "influence", don't resonate strongly with the majority of characters in a realm, who are at most knights. Keep the dukes, lords, marshals, council happy too, of course. But the bigger challenge I think is to keep the knights in line, and to be careful selecting who to promote to positions. A rotten duke/lord/marshal/council member will be an even greater threat to the realm than any stray knight, usually. Make sure all who would pursue to become leaders of the realm, be it on the council, as a region lord, or a marshal, understand that, as cheesy as it sounds, with power does come responsibility. More specifically, the responsibility to make the rest of the realm feel that spirit of teamwork.
But now there's some difficulties. I would suggest a sort of tally of wins/losses in battles and such, but that hardly sounds good, not to mention it can be cluttered quickly. I don't have any ideas right now, but really, something at least, to make it feel actually real, that fighting in a war for my realm actually means something. Otherwise, to me it feels like a lot of words, which is exactly what they are, literally speaking. That shouldn't happen though. I should feel connected to my realm and teammates. Without that feeling, there is nothing but a bunch of cold unfeeling text, and that makes it all the more easier to be selfish and uncaring about what other characters I must hurt to satisfy my own desires.