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The only issue I've had with factions so far is in one game as Byzantium a bunch of Anatolian and Armenian vassals declared independence while the Seljuks were right there. I mean, it would be one thing if a Greek or Serbian or Bulgarian vassal rebelled, but it's suicidal in the long term even if I wasn't the one who would retake them. They might not like me, but at least they have land and safety.

That's more realistic than it sounds. Note the independent Armenia in the history files that pops up the moment the Seljuks take most of anatolia.