Yes the problem with a scheme like this is the AI.

My plan is to have the castles provide a number of free upkeep units, which would be units such as knights and levy/sergeant spearmen to represent their retinues. The initial payment cost of the unit represents the land given to be worked by those nobles/knights (since the cost of their equipment is their responsibility) but they are free in upkeep if garrisoned at the castle from that point to represent their feudal obligation, however their replacement rates would be very low. This sets them apart from the 'standing' armies that must have their upkeep paid for.

Note that if these 'feudal' free upkeep units end a turn away from the castle, their upkeep must be paid (and it could be higher than normal) to represent the fact that their feudal obligation is really only for 6 weeks or so. However if a campaign is kept close to the castle their cost of use could be kept very low.

Only certain units would be designated free upkeep, not all units able to be produced by the castle.

I am working this into my EDU and EDB files currently.