[MaxWilson]

You get the bonus of him no longer being able to produce his capital-only troops. That's nontrivial. It also tends to be a rich province which means lots of income, plus the gems as you mentioned. Maybe you're looking for something closer to the feel of Axis and Allies, where if Germany manages to take Russia's capital it can start pumping out 8 infantry per turn in Russia and the game is basically over because the allies can't take it back. Maybe playing with victory points would help that feel a little, since each capital captured is another step towards winning, although it doesn't give you any in-game boost like better armies.

Producing other nations' units is something I'm pretty sure will never happen in official Dom3. Marverni's population isn't going to enlist in your army just because you conquered Marverni (although it's true that indepedents do). It's probably possible to mod it (or even use map commands), if you pick a priori which unit should be produceable in each capital.

-Max