I think part of this issue is that there is maximum achievable production level at all. You're at peace, you have enough knights/estate coverage, and everything goes to 100% but not a fraction more. Then the realm is at peace for a while, and what was seen as a new region and a nice boost to realm income becomes thought of as the standard that must be maintained no matter what. If war comes or a knight leaves and the region drops below 100% then everyone freaks because the region that used to provide them with a reasonable income now makes less and they feel they are getting shafted. Simply put, if there is a reachable maximum level then everyone will want to be there all the time. Take a look at your typical mmorpg's (WOW, etc) and you'll see a large number of players don't even consider the game started and their character fully created until they hit the level cap and have the best available gear.
So here's my thoughts:
1. We remove hard caps on production (and possibly other region stats, I haven't thought those through completely). A region that hasn't been looted and has only a lord's estate will be some baseline value. (call it 50% production). War and looting lowers the value, having knights and maintenance will help to increase it. But instead of a hard cap, you just have strongly diminishing returns. Having 1 knight might be able to increase production by 20%, but adding a second only increases it by 5%. Do civil work for 12 hours and the production increases by 5%, but the next person can only boost it by 2% after twice the hours. If it goes above the current 100% value, so be it, reward the additional effort but make sure that the opportunity cost increases drastically.
2. Rubber-band production. I can't remember if this is one of the repeatedly asked/rejected things, so I'll appologize in advance. Anyway, once the production values get outside a specified "average" range then the region is prone to minor fluctuations in production value that increases in magnitude the further away from the average value it gets. So, if production is slightly above the average then it would decay by 1% a week, whereas being far above the center value could cause a 5% drop in 1 day. The same would happen if production was below the average, but in the opposite direction. (so a region at 0% production would repair much faster than one that was just roughed-up a little)
I hope that makes sense to more than just me. To sum up: make it easy to maintain a modest production value and difficult (but still possible) to reach the extremes.
