I think that where CA went wrong with Protectorates is that they messed up and got what was going to be the benefits of the protecting balance, and made it the benefit of the protectorate instead, so it all got mucked up.

Good list, the only thing I disagree with is the limitation of training Peasants and Town Watch, a better thing would be to either make all units still available or just don't let any new units be trained by the protected faction. Also maybe a really really good benefit I can think of, one that will really spice up the game, is that buildings that the protector cannot get (excluding culture buildings) and units that the protector cannot get but that the protectorate CAN get are available to the protector.