Well, it is possible to change the so called "internal faction names" (the names of the factions in export_description_buildings.txt). It is a quite time-consuming process because you need to change lots of text files and the names of some files (like the names of the button files).

On top of that excessive amount of work it has some side-effects that might ruin the game. For instance in out tests at Imperium: Total War we've discovered that changing the internal name of the Slavs causes any other faction to CTD when we are using spawn_on_event and emergent_faction.