+1, so want this as an optional combat system for armies where the player's character is leading his capital holding's troops. (Tying a leader's appearance to the presence of the levy from his capital holding would solve the teleporting problem.)
I envision an expanded CKII engine generating the parties for a Warband combat scene, with the reinforcement waves corresponding to the individual levys from CK2. Combat would start with the leader's personal levy on the field, responding to the M&B commands by unit type. Your other levys would appear on field under AI control if they were led by a vassal/courtier and under yours if they had no leader.
There's already a decent mapping between real world culture and the stock M&B cultures. There's existing M&B mods that include morale. Troop composition maps relatively straightforwardly. CK tech levels could map onto available equipment. You'd select the order your vassals appeared on the field, with how many you could arrange governed by your CK2 martial & diplomacy skills and your tactics tech level, the rest showing up in order of their skills.
When your character engaged in combat, you'd get a stripped down M&B character creation / level up menu, followed by a store limited to culture specific items. Age and CK2 health would determine your HP, CK2 strong would give M&B ironflesh skill, culture and CK2 martial skill would determine your weapon proficiencies and combat skills, CK2 income would give you an allowance to buy M&B equipment with, etc. Kills in battle could trigger an event that gave you brave or craven, losing a lot of HP would get you wounded or maimed, killing your own men would get you wroth
A set of hidden CK2 traits like has_M&B_item_#x would allow truly awesome things like looting a quality sword from an enemy mid battle and years later handing it down to your son when he came of age and you named him heir. Who then would be able to spend his income allowance on better armor / horse, since he already had a fine sword. Lieges could pay a fixed amount of money to give their vassals a quality item for a small relations boost from the honorary titles menu. All kinds of fascinating tie ins become possible.
Code wise, I'd think an expansion exe that essentially alt-tabbed between the existing CK2 and an existing M&B install. Create a CK2 save, parse it to create the M&B levelup/store interface, save the players choices there, use the relevant info to create the M&B battle scene, then pass that to the M&B engine, resolve the combat, write relevant traits into a new CK2 save, and load that new save into CK2 to resume play.