Hmmm, I hadnt thought of your second way. Though I find it best and most likely to be done through the ruler way.
Yes, the only downside with this method, is if you don't trust the other realm, and you think they'll just kidnap/execute your ruler. (Yes, this is a legitimate in game experience)
But I agree though too. The 2nd method is a terrible way to do things, but I've also seen it as one of the more common ones used.
