That's the best way of doing it: the EB script does not work for hotseat games. I agree that for the first run a limited theatre is probably best. It's time-consuming to manage twenty factions and drop-outs are going to be a problem. I'd say five to seven factions are probably enough for a diverse game while still being easy to organize.
Two things for you to consider: firstly, will factions be controlled by a team or a single person? The former will prevent drop-outs and will make large factions easier (if, say, the Seleucids get dogpiled it won't be one person that has to fight all the battles). Single-person is easier to organize, though. Secondly, how are you going to balance the factions, both on the strategic level and the battlefield? Obviously, you are not going to achieve a perfect balance, but the weaker factions should have a reasonable chance of winning, or at least holding out.
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