I suggest the nature of federations needs to change. I have two suggestions:
1. A realm can only be federated with one other realm.
2. Diplomatic relations for federated realms are all the same- if one federated realm wishes to go to war with someone, the other must as well.
I don't really think that either of these needs to happen. (Although I admit that the second suggestion is interesting. It has its own problems, though. Like: Who determines the state of the relationship?)
First: Federations allow a group of small realms to play the big game. I wouldn't want to restrict the flexibility to the extent that two-realm federations would do.
Second: I think that the act of federating may need to be more transitive, and far-looking when signed. It needs to do a recursive look at relationships when accepting a new federation partner. If it is possible, through the new relationships that a federation will create, to trace a Federated-or-Aligned path to someone with a War or Hatred status, the federation should be impossible, regardless of the distance of that relationship. This restriction already applies, but I don't think it looks far enough when accepting new partners into an existing federation. We had a situation on EC where Perdan was allied to Westmoor and at war with Ibladesh, while Ibladesh and Westmoor were Federated. There's a bug about it on the bugtracker somewhere... If these relationships were further traced out to look for conflicts, then this kind of thing would not happen.