Works fine in M2TW, they can all be made playable by modding descr_strat, although some require some serious modding to make into a sensible campaign, e.g. the Aztecs will be stuck in the Americas for three hundred years with nothing to do if you don't give them the ability to build ships.

I imagine the same will be true in ETW. What I understand from what I've read from CA is that the reason factions are made "unplayable" is just because they aren't as well "fleshed-out" as the playable factions, i.e. they generally have less well-rounded unit rosters, no faction-specific intro movies etc, so they can't advertise them as playable factions.