It seems to me that the enemy taking over your cities would simply be a randomly selected quest, at least one per city (and there just aren't that many cities) which would, if it doesn't go well, change the city's faction.
Best part is, if done GearHead style, the outcome of the battles will be slightly herocentric, the Chatterbox and random character generation would take a huge load off the sort of trouble you're talking about, and if there's really a need for them to love or hate eachother, I'm sure that's not too difficult to code, or at least make quests for, either.
Finally, in GearHead, there is often another way about things. For instance, if you can Stealth your way into the hostile city, you might be able to complete a guerilla war quest which drives the enemy out on the basis of the city being too expensive to hold! Toss in a few "surprise attack" salvage missions, a few "hit and run" no-salvage missions, a few "destroy the smuggler"-style trade disruption missions, and on the basis of faction XP or something, have this Stealth-based character completely dominate a city he might not be able to take all at once, and maybe get a few lancemates at the same time!
Likewise, sufficient Conversation skill might yield up the ability to talk revolution and get the people to overthrow the oppressors without you ever lifting a finger. Toss in one personal-scale violent assassination attempt against the PC, and you're all set!
Finally, the enemy's various plotlines might encompass entirely the same selection, albeit simplified because you aren't observing the conversations or details. Therefore, you might need to talk down unrest in your own city, order an assassination and have to roll an Intimidate check against the people (which, if it fails, results in the assassinated character's martyrdom!) or defend your own transports from guerilla warfare!
I'd be willing to contribute to this, if somebody would write up the basic scenario. With this much easy-to-produce detail, it would probably be best to limit the number of cities.