A few things.
1. I think the idea on revamping character creation would eliminate a number of problems, especially if you could have the oath terms as part of the visible offer. That way everyone who is joining is explicitly joining with a given oath to help keep realm continuity.
2. It sounds convoluted, but I think in practice it would be much simpler. If a supermajority of the political power is in the hands of the central government, you have a Absolute Monarchy. If a majority, a Constitutional Monarchy. If a majority is with the Dukes, a Duchal Oligarchy. If the Lords have the majority, you have a Feudal Republic. And if none of the above, you have Rule by Blood (i.e. the game can't figure out what you're doing, and defaults to "Okay, the nobles run everything, alright?"). There would be some variation within systems, and things could get crazy if there's a power struggle between the Dukes and Lords, or Knights and Monarch but...That's how it should be. If you're in an active power struggle, then things will be chaotic. Otherwise, it'll be stable once the realm figures out where it wants to be (or is forced to be by the iron-shod boots of lots of soldiers).
3. I think on the backend, it would actually be simpler than the current system, as everything is determined by a single characteristic, and this would make it more intuitive to figure out, as well as making the descriptions mean a lot more.
+1 and wouldn't your "Rule by Blood" system where the nobles are in charge be a democracy based on the current system?
