best faction to turtle with?

[G^2]

It really is alot better to buy Bologna than to take it.
1) You keep you global rep up, which will help you only fight one faction at a time (although you are playing VH/VH in which your global rep will go down no matter what you do making diplomacy worthless, I play M/M where diplomacy works somewhat.)

2)Stay on the HRE good side because you won't want to invade them anytime soon making them great early game allies.

3)Save up you pope points for when you knock out Milan. You want early florins? sack Milan and Genoa in two turns wiping out the faction.

4)You get four units of Xbows which can be used to take out Florance.

As for churches, they help you in a roundabout way win papal elections.

1)You can make more priests which gives you a better chance of having more cardinals, which increases your pope voting power.

2)When you build churches and recurite priests your pope standing should increase.

Keep in mind having your pope in power does not make him your pupet. Your pope standing will be around perfect so you can get away with more but it really is a limited advantage.