Well, apparently, we are not to abandon nationalism as a concept... so I see no problem with up to 100 nobles all being "friends" in one realm. That's nationalism for you, right there.
The fact that great realms have acquired their size through competence might be through, but I don't think they are limited in their abilities to grow larger. With Ibladesh we established a colony in Aix to expand our influence. That's the point where the game is right now: you are huge and it tells you you cannot possibly take another city. I believe the game should say way sooner that such a centralized form of government is impossible in a medieval setting.
A note on your point about "tensions": such tensions would be invoked if there was a form of ducal independence. Of course, there are always tensions in a big realm (somebody doesn't like somebody else), but once a higher authority steps in and tells both parties to play nice, it mostly puts a stop to it. With ducal independence, you'd have a nice fight over such discussion.
