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To your point, I never loot in the game but, the following will happen if you loot after RD.
If you loot a province, you affect the public order. This means you will have to garrison the province with a force and/or agents and construct buildings for happiness/repression for many turns as well as adding likely rebellions to the enemies arrayed against you. It will make the end game run a drawn out slog.
Now, if instead of looting, you make that province a vassal (not after RD but after becoming shogun), you now have a clan that is not subject to the RD negative relationship modifier; is a guaranteed trade partner that will earn you ~1500koku/turn in trade (instead of the 100koku/turn the province would get you in tax); will soon provide a full stack army and go to war against your enemies; you don't need to worry about public order in the province; and they cannot declare war on any of your other vassals.
Now multiply that by 20 vassals and you have an insane income, immeasurably large army and can sit back and let your vassals finish the campaign for you (almost).
Eventually the vassals opinion of you will sour because of your continued expansion. To counter this, every now and then you just gift them 1000 koku or so to improve your relationship, which is nothing compared to the money you are making from them.
or do it the easy way that mark suggested :)
But i never run full honor happiness mods lol i might have to try that since ive wanted to RolePlay a pirate general campaign.
This is correct for vassals before you become shogun.
After you become shogun, they cannot get you into wars because you are at war with everyone else anyway.
They can expand as fast as they like because realm divide has happened and every province they take counts towards your victory condition.
As a trade partner they will earn you 10x more than as a tax (unless they have a gold mine or fertile soil).
They each contribute a free, full stack army to your war.
You don't need to waste time sorting out religion or happiness, you just move straight through.
There really is no downside to forming vassals after becoming shogun.
In fact I am inspired to trying a run where, after becoming shogun, I make a few vassals and then see if I can disband all my armies and let the vassals finish the campaign for me.
https://steamcommunity.com/sharedfiles/filedetails/?id=3084015094
However, if you make too many vassals and your vassals border each other, there is a chance one vassal will declare war on another vassal (as they are not allied with each other) and then they'll force you to pick one and declare war on the other or break alliance with the attacked vassal to avoid war with the attacking vassal (which i however think is worse in terms of diplomacy and will have a bigger negative impact on all other vassals of yours witnessing what happened, but correct me if i am wrong)
Make the vassals after becoming Shogun, not after Realm Divide, (especially if you trigger RD before you have taken Kyoto).
If you trigger RD before taking Kyoto, any vassal you have will get the RD relationship penalty and will rebel in time. Any clan that you make a vassal after RD and before taking Kyoto will, when you take Kyoto, get an RD penalty at the time you take Kyoto and will also rebel in time.
The safest time to make vassals is after becoming Shogun. They will not get the RD penalty at any time.
After becoming shogun you can make as many vassals as you like, I usually end a domination with about 20 - 25. Vassals are not able to declare war, so they never declare war on each other. They still get the expansion penalty as you gain more provinces / vassals, so you need to throw them some koku every few turns to keep them happy, but it is nothing compared to the amount you get from them in trade.
The only risk to your empire is that, if you still have an ally after becoming shogun, they will likely choose to attack one of your vassals at some point, then you have to choose between defending your vassal or helping your ally. This is an easy decision. The vassal province counts towards your total provinces, the ally doesn't. So, defend the vassal because you probably need the ally's provinces for victory if you are playing a domination campaign.
While your ally and your vassals are fighting the clans that you are at war with, position your armies ready to take your ally's provinces when he declares war on one of your vassals.
"so you need to throw them some koku every few turns to keep them happy",
only cause you are too kind with them.
LoL
Only because I can't be bothered to fight them :)
I personally got too many surprises on the past , and won't let them take more the 2 province , but using them like mercenaries is for sure practical.