[ano]

I agree that mercs concept is fine and promising, just want to make it more effective. I know that Septimius worries the most about thematic aspects while I mainly worry about balance and gameplay issues. And from this perspective I think that current merc concept needs a bit more love to be effective.
To increase overall effectiveness and strength -> population and resources may be added.
To increase services effectiveness -> wide spectre of gems (namely income of 1 gem of each type) could be given

That may not be enough, just current thoughts.

Also, while merc cap is untouchable, people may eventually just capture everything instead of that cap. Merc position is no better than position of AI because concentrated attack from any of the human teams will just slay them in a few turns while, I believe, we want them to stay in the game as long as possible.