In my games they usually establish themselves with a county or two in the Balkans and then a series of baronies. I fought them and the Poles as they joined a defensive pact against me, the Teutons raised 12K of their own troops. So not an irrelevant force in my book.
About vassalization: I havent tried the Teutons, and it has been a while with the spanish orders and the Templars/Hospitallars, but they dont accept through diplomatic options, but through the intrigue tap, if you have the correct de jure land (I have no clue what that is for the Teutons).