Slitherine

There's a pretty big hit for occupying a capital, what about thoughts on some benefits to help out :
-1% revolt in surrounding provinces if capital is occupied
+1 to recruitable elite units per occupied capital
1 unit designated as recruitable (auxiliary) if conquered
reduction of revenue lost because of distance to capital

Agreed. Capital annexation is receiving a balancing pass. The current system is overly simplified and harsh initially. The world pretty much just redlines immediately. We are shifting the penalty to a smaller initial jolt, dependent on if those realms share the same race or alignment, and whether they are Civilized or Rogue. In addition, we are adding a similar smaller permanent penalty to your baseline relations with all realms. These combined systems will give the world a smaller jolt initially and then longer term suspicion. In this way, you might be able to get away with destroying a few realms...but as you do, the weight of the world will more gradually start turning against you.