Making Peace?

[Agent Miles]

If you assassinate the ruler and all the royal family heirs of this small faction, then their provinces become rebel. If you are not at war with the rebel faction, then they will trade with you, if they have ports. Even if the faction reemerges, they won't be at war with you.

[Martok]

Also, don't forget that using a Bishop to propose a cease-fire is generally going to have a greater chance of success than using a regular Emissary. This is especially true if the Bishop has a few stars under his belt.

That said, in the end, the strategic AI can be rather short-sighted, and you may not be able to secure a peace with an enemy faction despite everything you do. This seems to be especially true when it comes to the AI recognizing the overall strategic situation vis-a-vis yourself.