Idea: Setting terms before battle

When you send a diplomat to a small unit of soldiers, rebel or otherwise, and tell them to surrender or you'll attack them, they unvariably scoff at your proposal. Try bribing them and they're reluctant, but bring enough gold and you'll have then disband or join your side; expensive.

Once you actually bring an army to bear, it's a much more immediate threat but those on the field aren't able to say "oh crap, maybe we made a mistake!"

I think that should be changed, but that would also mean implimenting, as per MTW, taking hostages.

Anyone have any other ideas along this end?

Well, yes that would be nice. But wouldn't that eliminate diplomats to some extent if you only need to have an army near an enemy to initiate diplomacy.
But I would indeed like to have the rebels (and enemies for that matter) become 'softer' in diplomacy when you have overwhelming strength behind your words.