So, assuming that there will be a merchant republic patch (man, I hope there is), there will need to be some mechanic changes. However, the good news is that I don't think that the changes have to be so drastic that it would make it difficult a very big task to create.
A simple way of making the merchant republic playable would be to add the ability for wars to be declared on baronies and cities (by merchant republics) this way wars can be fought outside of the actual provincial sphere if the merchant republic chooses. In their owned territories (now including sub-provincial towns) merchant republic-only buildings can be built that offer increased revenue far beyond what regular towns would normally produce. This would make the republics fun to play on a different scale because a prosperous city might become the target of a king or a duke. The trade portion itself doesn't need to really be implemented, but can be modeled in the revenue that is generated in the town.
Also, the farther a holding is from the capital, the more money it generates, maybe? [Alternative idea: each region can have buildings that are allowed to be built for republics - so in the M-E, spice and textile buildings, in Europe salts and resources, etc - just to spice things up - yes, pun!]
I proposed this system rather than an influence system which would require a whole lot of new coding, but this works perfectly because just for merchant republics, we remove the "wrong holding" limitation and create its own 'culture' that would allow for special buildings to be built. Could also be that an alternative to conquering, one could buy or request a city from the ruling faction. Example: as Venice, I want to have a city in Alexandria but I don't necessarily want to fight for it, I can buy it from the ruler or demand it, if my relations are good.
Mayors now become the main vassals of merchant republics, but that's alright. Native armies might be smaller, but since there is more money, mercenaries are a viable alternative.
The succession types don't have to be modded, but the electoral system being the best, the others would give it too many penalties but could be a twist to the game (making the Venetian republic a dynastic system, i.e.).
There could be a system of tutoring, mentoring where as a leader you can favour a certain candidate and 'train him' (similar to the youth tutoring system) and appoint him to certain positions that will gain him reputation.
That's all I can think of, but I don't think it's all that difficult to make the merchant republic a playable faction.
What do you guys think? Paradox, is this possible? Consider it please!
I was getting excited of playing this as I was writing lol