I'm almost of the same opinion.
Having two of three cities seems more correct that having just one, and it should be Toledo or Valladolid (not sure, but I think that Valladolid was the capitol for some years before Phillip II moved to Madrid).
Lisbon was probably bigger than any other city of the iberian peninsula in the early years of the XVI century... there is a tale that Philip II asked someone where should he put the capitol, and that person (Alba?) said that, if he wanted to keep his dominions, it should be Madrid; if he wanted to increase them, Lisbon; there is a third part, if he wanted to lose them, it should be xxxxxx (I can't remember, Barcelona?, Naples?, Ghent?, Toledo or Seville? if anyone knows better, please reply)
About the event in the first years of Charles I/V, it shouldn't be 'move to Spain or there will be a revolt' because there _was_ a revolt, that of the 'Comuneros' and he accepted:
a)to have his heir, Philip, raised in Spain (in Castille, really)
b)he learnt castilian (when he arrived in Spain he couldn't speak any iberian language)
c)he accepted that only spanish nobles would occupy government posts
in Spain (not sure, but probably this applied only to castilians and Castille; many historians of old didn´t want see any difference between the two terms)
d)and he moved to Spain (or Castille, the same problem), for so much time as that errand knight could stay in one place, of course.
Better one of those 'several alternatives' events with varying intensities of the revolt in exchange for a varying level of
concessions to the castilian nobility, because Charles I/V didn't centralize the government IMHO, that was Philip's idea.