Also late to this party.
I love your idea of forming a city state. I just question whether it is feasible. One of my characters is on Danu shard Kerys province, Dovalon region. The place is teeming with settlements all over. Population is very high. In fact, I found myself having to actually spawn into the game in Tremen because the pop in Dovalon was too high. I think that is number of players logged in because my wife was able to spawn into Dovalon no problem a few hours later.
So even without trying to form a city, we're encountering some population caps in the most populous regions. Our clan has somewhere around a dozen members so far, and we're running into problems with finding land for new plots due to neighbors being so close. How would we even manage for a city?
I would love to see settlements in the same region cooperating to form a larger whole for influencing the world. I hope that will happen!