from my experience with vassals, (the only one ever being frickin portugal) is that they arent really worth for much.

they are a pain to get since i had to demolish every army they had then then offer them a bit of cash to become a vassal. They can definately betray you since 10 turns later they sent a small weak army at me effectively earning themselves independance for a good 3 turns before i came at them and exterminated the stupid bit of land i gave them south to block the moors for a while.

as to two vassals fighting each other, idk about that but i really want to try!