Why not have the civilised people start with cities - and balance that by having the barbarians limited to say large_towns. However, they should have access to all their buildings within the large town level, that way they can recruit their top level troops in smaller settlements as was the case. Now they will suffer from money, so make their units cheaper to recruit and upkeep.
with regards to law, again limit their bonuses. that way barbarian armies will enter large cities - say 20,000 or so. they will if they occupy it they will not be bale to maintain control and will leave again after 2 or 3 turns (be booted out after revolt). this will mirror the way barbarians tended to sack settlements rather than occupy them. only after repeated attempts at capture and the population being reduced significantly will they manage to take a settlement.
then you can have all factions with top level troops from the start - so armies will be varied. I too think the traditional rts style "being drip fed higher units over time" approach is tired and not really applicable to RTW.
good luck anyways