Barca threatened future war and hostile actions against Aurvandil, whilst insulting the High Sovereign and telling Aurvandil we owed our existence to them and we should do as they say on that basis, yeah that didn't go down well. You can call it absurd, but Aurvandil likes to be SMA about diplomacy, and insulting and threatening a monarch is not something that would have been tolerated by a foreign realm.
I'd really like to see those conversations, from Julius' point of view Mendicant was rather trying to turn every word he said as an insult, while talking to him with disdainful manners. Since you confirmed some time ago your OOC intention to keep the regions on your side, I guess you was just trying to force a situation that allowed you to act feeling insulted. So, you would be able to say "you've insulted the High Sovereing, and failed diplomatically in your attempt to have back your regions", rather than "we're going to keep these regions because our army is much stronger, so don't even try".
It's already a recurrent topic but I think it's not very "SMA about diplomacy" to offer a realm peace and then put a puppet state in its lands. As it isn't either to raid the lands of other realm to help your allies and then offering peace.
Someone who is consequent with his own actions don't do such thing. It can be interpreted as an attempt to have some guarantees that war won't come from that side whilst you don't start it, or just a way to keep civil population calm. If you raid an enemy's lands, or interfere in its politics, what kind of non-imposed peace could you expect?
You've mentioned SMA and also your recently founded indigenous religion, and in my humble opinion a religion called "Cult of Reason" sounds rather a late 18th century philosophical current than a medieval-looking religion. Things like that could make other players think that it's been founded in order to keep the peasants tied to their lords and fight the spreading of other religions, included the Orthodox Astroism. I insist, it's just my opinion.