Are you playing as Ibadi? Or somehow helping them to spread? Because, if not, that's a very rare beast!
Not playing as Ibadi. Did a Manipur achievement attempt, and this is one of the most notable occurances that i spotted when the map of no-player-interacted-Europe opened up.
Not sure how it happened, and can't check anymore since screenshot is at least from September of last year, and i tend to clean up screenshots and saves from games once a year.
It also had Austria as a Free City located in Tirol, but that's way less of a strange event, imo. Rest of Austrian starting clay was split between Bohemia and Styria, Hesse was the emperor.