B0rsuk's idea sounds pretty intresting, but what about units?
I had a project to make a Kalevala based nation for Dom II but I lost my intrest after I quite heavily reworked it. It had warrior-poet-mages with Nature-Air-Fire magic, wise-men with 1 random magic and light-medium infantry...
Also, arabic nation is quite possible as Dom III seems to follow Dom II's path of expanding the nations out of Europe and I'm sure that the area is quite rich in the magical mysterious of old times.
Edi's theory also feels quite correct...