Originally Posted by
Valandur
Pretty much this.
Although I do think a Lorien/Thranduil/VoA faction would definitely have enough room to expand.
Dol Amroth, Dunland, Ered Luin, Khand and Umbar, whilst they could be fiefdoms/vassal factions, will take away more than they give. Dol Amroth is surrounded by Gondor, nowhere to expand except by sea. Dunland is in a good spot for expansion but that will make Isengard extremely weak as most of their settlements are in the Dunlendish region. Khand could have an entirely new roster, look pretty and be playable, but what they do? They're surrounded by Mordor, Harad and Rhun. So unless you made Khand a non-alleigance faction who will go to war with Harad/Rhun/Mordor or vice versa, you'll basically just have a waste of a faction sitting around doing nothing, only useful in invasions. Same goes for Umbar, just a waste of space considering their only expansion route would be by sea, unless you made them non-alligned with Harad, but then Umbar would get dominated straight away. Ered Luin, whilst making sense, has no real enemies around them and wouldn't really have a rival faction. So, you'd probably end up having Ered Luin go to war with the High Elves or Eriador simply because they really have no one else to go to war with.
New factions will only work if -
1. They have room to expand.
2. They don't economically cripple an existing faction by existing.
3. They have a nearby enemy of some sort.
4. They don't go against lore.
5. Their rosters aren't near mirrors of another factions, they were scraping the barrel with OotMM and OoG.