I think what a lot of people fail to grasp is the ability to unite a diverse group of realms that this empire brings to the table. They need not always be friends and allies, but they can unite behind a common cause. After uniting behind a single cause they can unite behind other issues.
I am confident that the Phoenix Empire will be a success as long as Coria remains with full strength behind it. The question is, whether Merlin has the capability to pull together his realm behind his dramatic and fast changes to realm policies. If he can do that, then he'll be able to easily operate as Princeps of the Phoenix Empire.
It all sounds very grandiose, but I have doubts about Coria's ability to back this up. It sounds like you are trying to recreate the anti-Cagilan Alliance as a Corian Empire. Props for the opportunism this demonstrates, but I doubt you'll get salty old codgers like Sordnaz and KK to sign away their rights unless it is purely for the purpose of getting Coria to help them fight the Empire. And that, as jaune pointed out, is the real question: What do you do if Darka up and joins you, and they're the only ones?
If the situation weren't desperate, I don't think anyone would necessarily be inclined to join you. The rulers of Atamara are by and large lazy and extremely self-interested, or at least that's my opinion of most of them from the time when I also was a ruler. These qualities are not ones that recommend themselves to being swayed by the kind of semi-messianic rhetoric you appear to be employing ("Come my children, Coria can save you all!"). If realms join you, it will be for selfish or manipulative purposes, as would be the case if Darka decided to join up.
The only way I see this working is if you're able to package and sell this less as an Empire that you will have to mortgage your sovereignty to join than as a sort of anti-Cagilan security guarantee. Basically get the entire island to join into a defensive alliance that is specifically against the Cagilan Empire. Then they keep on doing what they want, and rely on the idea of an island-wide alliance to deter the Cagilans from interfering in their affairs. I don't know if you can sell that though if the price of joining is too high.