I didn’t mention that because I’m pretty sure the Free Cities of the Qalsa (Corsairs) have already developed it, but want to kick the tires on my conception of the Qalsa a little more before I commit. 
I think the smallest scale at which you could stabilize your realm is probably going to be the city-state of Corlune or Aveche – a single big city with its immediate agricultural hinterland. The next step up would be a backwater region like the Shayard Rim or a good-sized chunk of the Wiendish highlands. On either of those scales, you’ll have a lot of opportunity to shape institutions and try to shape/control your population, but you’ll be more vulnerable to invasion by bigger neighbors. The latter problem could be dealt with through alliances (with your neighbors in the case of the backwater state, probably with a more powerful non-neighbor who guarantees your security if you want to assert control of a small, highly strategic location) and/or through extraordinary battlefield success (i.e. be Frederick of Prussia with a substantial Theurge corps).
The next step up would be control of a non-backwater region like the greater Aveche region (i.e. the 4-6 Hegemonic districts north and east of Avezia, like Lacevra, Rinocci, and Uvigne – with a somewhat greater challenge if you want to extend west to include Amaccia and the eastern river-canal linkage to Aekos, giving you the power to tax or throttle half of Karagon’s food supply). A state like that might be around the same size as your backwaters, but the substantially higher population, greater wealth, and neighborly attacks/stirring-up of dissension will make it harder to bring under control. (On the other hand, such a region would also have higher literacy and, unless it’s been totally devastated by revolts, greater state capacity.)
By the time we get to a realm the size of Rim-plus-Southriding (almost as big as our world’s Turkey) we’re no longer in small-state territory. It will still be easier to control and shape than all-Shayard, let alone continent-wide, realms…but should be substantially harder than the smaller states.
It’s a good question, and by the end of Game 2 we should have quite a bit more grist for that particular mill.