Don't change it, and if you do, make it optional or only required for harder difficulties. I like the penalty-free nature of the game.
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Interesting, I may have to get Majesty. I actually like that idea of monsters spawning because of certain buildings being built. Say you build on a gold mine and that angers the local dragon.
You're in luck, Cyberlore redid Majesty Gold (which bundled the original and the Northern Expansion together), fixed some bugs, and it's available on Steam (and I think Gamersgate) under Majesty Gold HD