Having deleted the movie files and trying again, it did indeed not fix my problem. Oddly enough, the error log only had one line.

18:16:43.859 [system.rpt] [always] CPU: SSE2

As for my method, I used DukeofSerbia's guide to creating new factions. For each file he mentioned I searched for 'HRE', and for each instance I copied the data and replaced 'HRE' with 'Austria'. The exception was names.txt, which I did not modify since I did not add any new names.

The Custom Battles were intersesting. The faction symbol didn't show up of course, but on the unit selection screen all the units were displayed as RTW peasent. Further more, when I tried a battle they units were invisible with only the green markers to indicate their presence. In the first battle I order them forward, and they routed immidiately. The second time I let them receive the enemy charge, and they killed the enemy captain and routed them. Not quite sure how that happened.