So, I'd like to try and narrow this down to some more easily implementable proposals:
Give the option to create a ducal capital from a city or stronghold (or maybe townsland?) - either the ruler or duke could create one and the cost of doing so would be 75% of the cost of creating a realm capital.
Creating a ducal capital would have the benefits of either:
OPTION A
Allow recruitment from RCs in that duchy at the ducal capital with the trade-off that those recruits are also no longer available at the realm capital. It could also be the case that only nobles of that duchy could recruit at the ducal capital.
OPTION B
Adds an extra region's distance from the ducal capital before the "distance from capital" penalty starts to reduce region stats.
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To me the advantages of this are that it creates an incentive for realms to create duchies to combat limits on expansion. The price of doing so, however, is creating powerful dukes who can break away any time. It would allow the realm to improve its military capabilities in a particular area, but at the price of weakening its military abilities everywhere else. So you have a choice to make between a single, unified administration of your realm in a smaller area or a disunited administration of your realm in a larger area.
This would mean that realms were able to get bigger than they are currently able to but it would also make it more likely that conflicts within a realm would result in a powerful duke seceding to create his own realm. So, rather than realm reaching the current mechanic enforced limit of "you've expanded too far so your region stats are going to tank and there's nothing you can do about it", your realm would be able to grow bigger but at the price of creating powerful dukes which means that, sooner or later, one of them is going to declare independence.
So there'd still be a limit on realms growing too big but that limit would be enforced by internal conflict and secessions. This, to my mind, would be a big improvement on the current "grow to 14 regions with a single duchy then stagnate" model of realm evolution.
