I get your idea. However this is not what I originally meant with the townhall. The townhall idea can more be regarded as an extension that can be enabled in a mission script, and voilá, regions of influence are visible.
However, as I read your description, I do have another idea in my sleeve; this is not related to KaM Remake, and is a whole different scale idea. But I always like the games in which different levels are blended with each other. As you describe two very distinct modes, one regarding the building and fighting, the other regarding territory and AI: these modes are not blended. E.g., the territory 'game' has completely different mechanics than the original game, which is repeated and played several times and instantiated for each conquest played in the territory game.
Imagine a more role-playing-like game. Every beginning player who is introduced to the World of Knights and Merchants (don't mind my blatantly stolen name from World of Warcraft), starts out as a lowest ranking Serf: i.e. after login, the player walks out of the school and starts his game career. Being a serf is very simple: you will have to carry goods from one place to the other, earning some fine wages by doing so. Why would you need these wages? Well, easy! To retrain yourself, or to buy food (central aspect of the game), you need to have some kind of currency. If your character gets hungry, get to the nearest Inn and buy some food, if there is any. Hell, you could even starve to death (if there is not enough food to buy, or you don't have enough money). So who is the one making sure that there are enough farms, inns, etc. so nobody dies of food? Well, actually, the same player!
Every city has a town hall, and in there, it is possible to become elected into different functions (council or court). Election is a matter of being voted by the other candidates. When you are elected as a council, it is possible to zoom out and view the map as KaM is used to. You may place building plans, road plans, fields. You may also issue deconstruction, removing a road, or generally any planning activity. These actions are reviewed by other council members, and a plan needs be accepted by at least three people before it is performed. Each function also has specific responsibilities: for instance, the Surveyor is the only member that can view building progress. Those different functions are too specific to mention now.
Okay, let's get back to retraining in the schools: being a serf earns great money, there is always something to do and it helps you learn the city know well. The next step in your career is retraining to become a builder. After the initial cost of retraining, a player may always switch between roles. How do the city governors make sure there will not be too many serfs, or too many builders? But at the same time ensure there is not too few of them either? It's simple: serfs are the only profession that will be taken by AI players, if there are too few real players. On the other hand, remember the wages players received for their duty? These wages will get adjusted based on the number of players that are performing the job, using the demand-supply principle from economics: if there are too few builders, the wages for these jobs increase enormously, giving an incentive to more players to become a builder. If there are too many serfs in the city, the wages are reduced, letting players find other, better paying, jobs.
Building permits. The governors can not only choose where to build something, but also how it operates. The government can sell or rent out their industry buildings, or can allow everybody to make use of the facility at a fair price. Either way: industry buildings generate income, be it at different scales. The storehouse is another great tool for governors to control their supplies. Same principle for amount of jobs is applied to the storehouse and the economy of goods: the amount of goods required in the economy can be controlled by adjusting selling price.
Let's explain selling price and industry buildings in general. What if you retrain yourself to become a woodcutter or a stonemason. Then, you need an industry building before you can do your duty. Either way, the governors set their buildings for rent (to one individual), or for general use. In the latter case, it's easy: pick any unoccupied industry building and start working. In the former case, the renter of the building can hire other people and pay for their activity. However, any good you produce is owned by the building renter, not by you. So in the case you work at a general use building, and for instance, you cut down a tree, and return to the lumberjack shack, and plant back a tree, you earn one log by doing so.
What was that point on the storehouse again? Right, prices for goods. The storehouse is actually a big place for people (renters or freelancers): they can sell their goods to the government for some adjusted price according to their demand. Now, the real fun is in the economy: sometimes you need a log to process it into planks. Sometimes you need planks to create weapons, etc. etc. etc. People can buy goods from the storehouse to create a new good (including labor), which then gets sold back to the storehouse! However, this costs quite some time: so it is also possible as a player that you sell and buy directly from the industry buildings, which reduces the overhead of bringing goods to the storehouse, and sometimes may be cheaper too.
Now to wrap this story up, use your imagination to extend this idea to other industries. The main idea is that players are performing the role of each citizen in a city of Knights and Merchants. Then players can earn more influence by, in order of importance: first rent an industry building and run a smooth business, then own that building, then own several buildings in the same industry chain, then get elected as in city council, then extend the region and build more sustainable city, get appointed as mayor. And then there's the point of fighting: people need to buy their own outfit. A general determines the composition of his army by changing the wages for each class. Now, in the game in general, to die is to lose your equipment, but not the money you as a player has earned. Destroying buildings, on the other hand, actually destroys content too, but again not the money involved.
And now add this whole idea with a sauce of the new Town Hall idea, alike how Krom just described it: there are two or three or four kingdoms, the land around the capital has less and less useful resources (except for renewable), so expansion is of the essence. While the these kingdoms do this at the same time, they have to conquer land in order to become the strongest. The conquered land is fully player controlled, capitals are maintained by moderators. There is a notion of a king, but nobody can get elected as one (that would be strange).
Reference:
Medieval political structure
