Excellent ideas rory.
I've seen many of these ideas used in other strategy games, EG Call To Power series, Sim City etc, and they worked very well.
With regards to building settlements upon rivers, Call To Power allowed this to happen:
Surely a settlement (on the battlefield) can built around a river, with its buildings located on both banks as you see in all major cities?
Another feature Call To Power did exceptionally well with was the diplomacy. It used theatre masks to represent a nation's emotions to its known rivals. Emotions were directly related to all of your actions, be it from waging continual war with the world, breaking alliances (IE backstabbing), the wonders your civilization had constructed and so on. It worked so well, I wish something similar to this could be used in the TW series. Here's some screens:
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