I still believe that this approach works better. It is only one additional resource (or two, if we use Stone as well), and it allows the possibility of being better at one kind of production than another, and thus different strategic options.
It would help in making distinction between forests and mountains. Each of the region types would then have corresponding resource:
Towns and cities: goods -> better morale
Plains: food -> population growth
Forests: wood -> production levels
Mountains: metal -> cheaper troop recruitment and repairs
Badlands: sorry, your lands are simply bad
Metal could be tied to warfare mostly and wood for the economy in general. The underlining assumption would be that the blacksmiths, carpenters etc. are always able to get the raw materials they need, but they need to pay more for them if they are scarce. So if you (the lord) supply them yourself, you get better deals.
The idea of having goods available for easier morale control is a splendid one. I can imagine your backward and distant frontier region would be much happier if you frequently supplied them with the high quality goods from the city. But that costs you gold. However, the smaller your population / production / morale the less of the stuff you need to grow and maintain the regional stat.
