Sounds fun but also quite pointless, it's not going to affect the balance much between smaller and bigger factions, because bigger factions are still going to have far more soldiers, thus more armies. In Strategus ( before it was froze ) smaller factions before could afford to equip their armies with the same equipment bigger factions could, because they had less soldiers to equip, costing less gold.
Plus it would seem pretty out of place when you are fighting in castles with just sticks and stones, something up with the difference in technology levels there
.
Just my opinion of course, as you have your own.