The problem is that realism reduces player control, and they want their decisions to matter, to have the excitement of responsibility for outcomes.
Say, the Governor of Cape Colony, goes off and decides to invade Zulu lands on a pretext, against the wishes of the Capitol government who are trying to diplomatically lower tensions and reduce commitments; despite their colonies views. Realistic, but where does it leave the gamer, who can't decide on policy nor control his empire?
And you know if you do introduce such a faction, someone is going to try to conquer everywhere with it, having it act totally autonomously, even (more than likely) invading the homeland to. There's going to be 50 something factions in the game, if you add in all the large trading corporations, who had hired guns at their trading outposts and tried to expand their trading areas, against the foreign competition, it's going to be even bigger, for a feature that will frustrate many players.
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