They're also pretty decent at assassinating (and converting enemy agents). Just watch for targets with low authority.
As to keeping dignitaries in armies: upkeep reduction I think is faction specific (if we're talking about Attila here). The universal thing though is that dignitaries tend to significantly reduce army move points when embedded. So, in Attila, I'd use them that way only in armies that are not marching.
In Rome 2, they do reduce army upkeep universally and significantly. Can get the most expensive mercenaries down to regular troop upkeep and even lower.
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