I don't think it is too far fetched to imagine one type of holding being repurposed as another type...
if you tear down a church
"Converting" a holding doesn't necessarily imply directly repurposing or destroying the existing buildings, I think.
Consider this scenario:
- The province of Alfredia contains three
holdings: Beiron, a castle bristling with fortifications; Ceithry, a city bustling with trade; and Dumfrit, the temple with the tallest and loudest bell tower in a radius of ten miles.
- In addition to those holdings, however, there are innumerable smaller settlements that are too insignificant to merit the in-game title of barony. Say, for example, that, about a mile from Dumfrit, there exists a sleepy hamlet, too small to have a name. Its ruler, Hartwig, is hardly more than a bandit who extorts tribute from the local farmers (but still remits most of it to the county administrators), and he certainly doesn't rise to the illustrious rank of "baron".
- One day, the profane King Gregory of Faronland deigns to consider Alfredia, which is one of his demesne counties. He's tired of how the Bishop of Dumfrit sends to the distant Pope all the taxes that should by right go to the royal coffers. Gregory grants the title of baron and a pile of gold to a flabbergasted Hartwig, and instructs the county administrators to hassle Bishop John and to take it easy on Hartwig (who undoubtedly knows little of how to be a noble).
- Over the period of a few years, John has his congregants intimidated into going to other temples until he's hardly worth the title of "bishop" that he nominally still has and he lacks the funds to keep his temple in proper repair, while Baron Hartwig's ramshackle fort in the village that has usurped the
name of Dumfrit has been upgraded to a brand-new castle (though still a tiny one in comparison to Beiron).
