Not out of line at all, especially since it'll be going public in (hopefully) short order.
And no, CTO isn't running yet as loyalty is too high. Which is an annoying mechanic, even if it does make a certain amount of sense.
Indeed, three realms are going to be swearing to the Empire. I think there are a few things that are going to make it viable.
1. We're going to have (the guild has been built, just need to finish the fighting so everyone has time to join) an empire-wide guild. Now, Arcaea currently has discussions in three main ways: The whole realm, the Phoenix Court (where most everything gets discussed), and the Military Conclave. The guild is going to simulate that with the all guild, full members, and elder members. The idea being that a good portion of the conversations will shift to empire-wide instead of realm-wide, helping with the unity problem.
2. I fully anticipate that over time (though probably a long time for Jenred if he stays in the position) people in one of the other realms will decide they don't like someone from a different realm being in control. This is one of the (many) reasons why there is going to be an internal war system with internal rankings. Each realm will have a rank, which will also determine what percentage of their taxes have to go to the Imperial throne, and the highest ranked realm chooses the Emperor. The Emperor then stays in position until their realm loses their rank and a new Emperor is chosen. Ranks change via a formal challenge where no outside assistance is allowed and the two realms fight from the first day of Spring to the last day of Autumn, with the winner taking the higher of the two ranks and the loser the lower of the two ranks in dispute. Determining winners and losers may be non-trivial in some cases, but I think a system where the loser is whoever has the worst change in weighted production (production of a region multiplied by its population) on a percentage basis over the course of the challenge would work well enough.
3. The secession you referred to is going to be Topenah and Talex duchies, leaving the Kingdom of Arcaea with Lasop, Remton, Nocaneb and Niel in an excellent defensive position but not the best offensive position and being much less scary without the context of the Empire.
4. One of the (probably few) powers of the Emperor is going to be the ability to declare whether a campaign season is open or restricted. Open means each realm of the Empire can fight whatever wars it pleases (challenges, other internal wars, external wars, what have you). Restricted means wars require the approval of the Emperor as there may be a situation where the entire Empire need work together for some goal. Clearly there needs to be some check there, and Jenred is going to set a very firm precedent that restricted campaign seasons are only used sparingly.
5. The empire is certainly going to have the one position per family per realm rule Arcaea does now (at least after the initial colonization stages where it may be unavoidable) and I'd really like to make it one position per family for the entire empire. The idea is to suck as many interested people in as we can by making positions more available than they are most places.
I'm happy to explain more if you have further questions (hey, this helps me organize my thoughts for the big speech Jenred's going to have to give about all this, which is handy).
