Yeah - its a beautiful idea, but nobody really knows the real value of strat gold either, especially so early in this strat. Factions are scrambling to make +0 items atm, since everything starts ruined and tattered. Modest payouts are appropriate, but again, you need to RP pretty hard if you actually value strat gold. 1000 strat gold is a ton atm. As an individual it would be more appropriate to piece together small sums of gold less than 50 - if the system's to be used at all.
It would be really cool if you had to pay up front - but in all honesty, clan battles and agreements already have it to where they sign up for each other for free - anything less is an insult to their pride. Already, mercing for clans is a type of backhanded diplomacy for those who are already in clans. Strat 3 was mostly a cold war for most clans. If you signed up against those who you were on good or peaceful terms with, they will get suspicious and uneasy, if not, take it as a malicious act - especially if they perform well in an important battle.
To me, that's problematic, and I would like to see a better system, but can not offer one. I would hope its nothing too drastic. Its kind of OK how it is.