On EB governments: basically, if you acquire a settlement, you get to decide what degree of control are you imposing on the region, with the lowest level being a Vassal government, and the highest level is Homeland. Homeland type govs offer the best factional recruitment options and the highest level of civil infrastructure, but this is usually restricted to roughly the starting regions. Vassal/Allied state offers way less building options, next to no factional recruitment, which is replaced by regional recruitment. But they are available throughout the entire map, and can recruit a Governor character, who helps stabilizing the region (so this one is typically a short term solution). And there is a gov type in between, with more control then an Allied state but still less then Homeland - building options represent that, and also there is a mixed recruitment of regional and factional units.
In EB1 this system is static, for every faction there is a set amount of regions Homeland and Province type government, with Vassals available everywhere else. In EBII, it varies by faction, and is more dynamic, there is a certain level of assimilation. I would prefer the latter, though it is fairly complex and difficult to implement. There is link for that:
http://www.twcenter.net/forums/showt...s-and-Colonies
As for transiting a similar system for C&E:
I think there should be a Vassal tribe option, with native/regional recruitment, and restricted building options;
A subdued region, with more building options and a broader range of recruitment: natives, and natives trained and equipped by Europeans;
Core regions, with the best building options and factional units only - but you have to build ports to recruit them, as they are rather shipped in instead of trained on site;
And perhaps, if your colony decides to brake away from the mother state, then this event should unlock new stuff as well - but that's another story
Colos