It makes all Knights (both mounted and dismounted) and other elite units general units, making you more attached to each unit you have.
This gives the game a more realistic feeling, because during the Middle Ages, under feudalism, Knights were recruited from Nobility. The leaders of the armies were nobles too. Nobles were either loyal or disloyal. Thus, the King could give his daughter's hand to any nobleman, if he wanted.
Be warned, that this doesn't make them Family Members. This makes them only Generals.
They become Family Members only when you marry your princess to them.
Put it into */Medieval II Total War/mods/Magyar_Mod2/Data and override the original one.
Be sure to make a backup of the file before doing that.
Hope you like it