my first thoughts about it:
civilization, yes, even if just to give them their own civ name for distinguishing them.. cities and buildings? no..
personally i think itd be cool if they had scorched earth trait so they razed all cities they take, maybe generating extra werewolves.
maybe the baron could act like a supply wagon thingy from the mongol horde scenario.. i.e. generate free wolves randomly.. the only problem then if you run out of gold from unit costs, but you could start them out with like 5000 gold, that would keep them alive for atleast 100 turns even with 55 units, and they can pillage and raze to get more gold
to me they should be more like a plague than a civilization, maybe even auto-war on everyone, and have a really high chance to make more werewolves from combat (even like 90%) but with a fair chance of them going barbarian more often. that way as soon as theyre in, even as AI, theyll spread quickly and spread as barbs as well
edit added:
doing basium a similar way with no cities would be fun too heh, with basium being where the angels spawn