I've noticed some folks having trouble with forming the Rebel Alliance as the Republic Loyalists. I have also had this problem with the appropriate event not firing even after finishing the necessary tradition tree, so I did some digging in the files and found the event ID needed.

To start to form the Rebel Alliance you need to enter into the console "event swp_rebel.2".

This will give you the option to form the Alliance or maintain the status quo. If you choose to form, then 15 days later you will get the actual event that transforms the Loyalists into the Alliance, drops the Pacifist government ethic for Militarism, gives you a nice new flag, and new country colors.

Note that your Institutions will change, and you will lose a great deal of your envoys and as your institutions change to become more geared towards war instead of subtle influence gathering and diplomacy.

Hopes this helps you all!