Even though Otto von Kassel was a direct beneficiary of the Steward system, I'm voting for Dukes as they stand now.

Essentially, those who want power must earn it through role-playing, plotting and success in the field. I'm a bit leary of handing a Duchy to a random player. One of the problems with KotR were "absentee" Dukes. Those who participate the most should have their rewards.

Now when the young Princes come of age and wish to take their place in the world, they can attempt to take or make a Duchy, but I'd rather see them do it through in game effort (Diplomacy, marriage or war for example) rather than by decree.

While an appealing family tree split into branches would be very nice, the inheritance AI tends to make a hash of it anyway.

I'd be fine with either system no matter how it shakes out.