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Republics pay half the taxes of non-republic mayors too - But that's because they make more than twice as much anyways. Usually they'll still top your other vassals for tax income.
Oh they love to revolt and lead factions.
http://steamcommunity.com/sharedfiles/filedetails/?id=234560777
In my most recent Ironman game I went back to basics and played as the count of Dublin, upon securing Ireland I gave the southern duchy (horrible at remembering names) over to my own vassle republic to help get an early jump on income. Their ships and money helped me win a crusade and take all of Jeruslem.
If you want to learn how to make your own merchant republic for playing then check out my guide on Steam "How to Make Your Own Merchant Republic". Though it does tend to make for a pretty overpowered game, espically as a Norse Pagan (OK, Norse Pagan merchant republics are sick, I made one based out of Brittany and managed to dejure the entire map under the Kingdom of Brittany while throwing back the Mongols and Aztecs all without raising a single levy after the 2nd ruler I had... Also learn the power of Retinues).
Ideally once you empire starts expanding you might want to create merchant republics in key locations. Or not. Depending on how much you feel like empowering your subjects.
But its usually a good idea to have one close to your main holdings. As they usually start creating trade posts and trade zones close to their area. In addtion this usually makes putting down a revolt easier.