Preface: PhD student of Chinese history with colleagues who work in religious studies and sociology.
Among academics, the debate over whether or not Confucianism should be considered a religion has been ongoing for quite some time. The consensus tends to shift one way or the other every decade or so, and in my experience (which is by no means the final word) religious studies people consider it a religion. I disagree and consider Confucianism to be a complex social philosophy that fills many of the same roles as a religion, but without the extreme focus on providing answers for questions about the afterlife, the nature of the universe, etc. As an example, this is reflected in the absence of (and lack of preoccupation with) a single creation myth among the various Chinese philosophies. On the other hand, Confucianism was really the core repository of moral tenets from which Chinese rulers would draw to establish their own legitimacy, just like religions in other areas of the world.
The problem stems from the fact that the English term "religion" comes from a cultural and historical context that can easily separate distinct units of belief; i.e. Christianity, Judaism and Islam. The social sciences (and to some extent the humanities) like to divide cultural phenomena into distinct and easily separable units. This is really a remnant of late 19th century philosophy that came out of the Enlightenment. The complex and intertwined nature of "religions" in East Asia (Confucianism, Daoism, and Buddhism in China; Shinto and Buddhism in Japan) make such separations really difficult, but we still want to shoehorn them into a familiar framework. Ergo, confusion over what Confucianism really is.
The discussion over ancestor-worship in particular exacerbates the problem. It seems to be a very "religious" practice, but it predates Confucius, and Confucius himself placed less emphasis on rigid adherence to ancestor worship and more on proper moral conduct. (
Analects 11.12:
http://ctext.org/analects/xian-jin#n1367).
All of this is kind of irrelevant for the game, because to properly model complex religious practices would require a huge overhaul of not only East Asia, but probably Europe as well. If anyone has ever read
The Cheese and the Worms by Ginzburg, you'll know that there's considerable evidence to suggest that whatever early-modern commoners in Europe believed, it was probably highly individualized and so different from doctrinal belief as to shock an inquisitor.
I've never heard anyone argue that Buddhism isn't a religion, though it has a unique history of incorporating the elements of other religions and coexisting alongside them (though not always peacefully)