The variant with both kinds of VPs seems about right.
I would generally prefer to have graphs on - it seems silly, after all, that there no merchants or other rumormongers in the world from whom you can find out about general situation. However, in this particular case it's probably possible that we can generate such content ourselves, thus eliminating necessity of graphs. Still, I'm not sure...
Also, diplomacy victory is a sound idea. In PR-heavy game it's even possible for player to declare a vassality to other one if he is close to defeat. This allows weaker player to remain in game continuing to write stories, while his liege gets closer to overall victory (e.g., vassal votes as his liege wishes, possibly even contributing his VPs to lieges' total number). Of course, it's just an outline - agreements may differ from case to case, etc. If somebody's interested, please continue from this...
