[Dedas]

Yes I stated that above. This is no problem though as one more castle (another commander slot) is much better than the few resources you lose in your capitol. And remember: you do not lose resources per se, as they now are inside your new castle on top of that extra 50% that your capitol couldn't draw.
This does not mean that you should surround your capitol with fortresses. Just build one or two to begin the chain.
Also, this is the only good way to get competitive in research (yes you need to... especially with Ulm) as you can crank out hordes of the cheap and useful smiths eventually.

This IS a good strategy. Just look on the graphs in our recent MP game. Note my research and note that I've been at war with Pangaea and their war minotaurs from the start (not a weak nation).