Given the 21 faction availablity (if this is not possible to increase) still gives a decent chance to reflect some interesting factions:

Romans
Byzantines
AngloSaxons
AlanVandals
Visigoths
Ostrogoths
Huns
RomanoBritons
Picts
Irish
Swaef-Allemanne
Burgunds
Franks
Arabs
Sassanids
Moors
Geats
Svea
Danes
Slavs

As you can see there will be large superpowers in the central area of the map yet with room for minor factions to cause trouble and even eke out a potential threat in the western isles, the Baltic, the middle east and northern Africa as well as the vast Steppe areas.

I will be looking at making Britain and Ireland a real compact area with an enriched 15-20 settlements and similar so in the Germanic homelands so that warfare is truely rife in the barbaric hinterlands and yet the superpowers have their constant share of invaders and challengers, which due to the promise of trade, alliance and religion/politics in the game we can easily take advantage of to deepen the reality-factor for this age of turmoil.

The unfortunate need for generalising certain factions actually allows the chance to make them more interesting, E.G. in the case of the AngloSaxons we have for instance, the Jutes and Frisians NOT just Angles and Saxons. This will need to be looked at, but with mods like Europa Barbarorum that managed to completely revitalise RTWs tech tree and culture systems it should be possible to represent the variety of a faction's tribal family and it's nobility's diversity. This creates tensions within the faction as regards loyalty and shaping the very character of the domains and people you rule. These are the kind of interests and focus that I personally find so fascinating with both the potential in the game as well as the facts of the historical context the mod will be based on.