In the demo its not really clear...if I build a temple in a province am I strengthening the state religion and helping it spread into there if they worship something else, or am I strengthening the local religion to my detriment?
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You are strengthening the local religion's chance for successful omens but by an amount that is really negligible. Temples in their current vanilla state are a complete waste of money.
If that is all they accomplish then I could not agree more. Unless you're going to save & reload, asking for a 51% chance of a boon vs a 49% chance of a penalty strikes me as being pointless while you're in no danger and crazy if you are.
The finesse of your High Priest is what really affects religious conversion. Only build temples (if at all) in provices that embrace your religion.