This is an interesting idea; although if it was done, I would suggest Malta belong to the KOJ only in the Late Campaign -- by that time the KOJ was much reduced in power. In the Early Campaign, the KOJ will be at the height of their power.First Add Malta as settlement on map and give it to KOJ with a Hospitaler HQ in it (may not be total historical for time line but should satisfy the hospitalar fans)
Of course they would have Jerusalem, since it was the center of the Kingdom of Jerusalem. The current Early Campaign is total fantasy -- the Templars didn't even exist at that time. The first Crusade had not yet happened. There was no Christian military presence in the Holy Land.Also if for early the KoJ and the Templars were merged then they would need to be in control of jerusalem (to be historically correct) and to make them fun to play no more then 1 more settlement so that means bibi KoJ in the first few turns.
By merging the two factions and pushing the Early Campaign start date back just a few years, we get to recreate this new kingdom -- a powerful nation that won't quickly succumb like the weak Templar faction does. It's a more historical, more fun, and more balanced solution -- and it opens up a faction slot.