As a further elaboration on Delvin's idea (which I very much like, and helped discuss some of the ideas on), I want to talk about the hierarchy aspect of these proposed new Alliances.
What I was envisioning with this is reminders, from the game, that you should be behaving as inferiors/superiors. Little bits of text in various places making it clear that if you're writing a letter or RPing with someone in a lower-ranked realm in the alliance, you should not be treating them as an equal. If you're writing to someone from a higher-ranked realm, you would be reminded to be extra respectful to your social superior.
That kind of thing would certainly rankle with quite a few characters, and other characters would take full advantage of their superior status to be pains about it, leading to significant friction.
In addition, I think there should be mechanical benefits to being a character in the top realm in the alliance, possibly related to prestige gains, but the main thing is to mechanically incentivize people to want to be the top of an alliance.
Between those two things, I think having hierarchies would better simulate the petty politicking that led to so many low-level conflicts. Right now, alliances are often "round table": All realms in them often are treated as equals, ostensibly, even when that's obviously not the case. This would create a lot of potential bickering over who sits at the head of the table, and who gets to be closest to them. If you have to publicly state that your realm is of lower status than three other realms to join an alliance, you may well think twice about doing that, and even if the Ruler doesn't, it provides an opening for a challenger who wants to see their realm restored to full status.
