I don't know if it's a mistake or not, so saying it anyway...
Under SPF_SQUALOUR in descr_settlement_mechanics.xml this line appears to be commented out:
;;; <castle_modifier value="0.75"/>
But in XML comments should be in <!-- -->. Unless M2TW also knows to treat ; as a comment in XML (I have no idea) this line is not actually commented out.
EDIT: confirmed: castles = 0.75 does seem to be in effect.