Theres a number of quality suggestions in this thread, but Im going to add something thats been bouncing around in my mind for a while, if only to prompt further discussion.
The basic idea is to tie the beginning of the crusades to the construction of a world wonder (or project, I suppose), and to represent the crusader states as a minor (unplayable) faction. Fortunately, appropriate art for a crusade wonder already exists.
When this wonder is constructed, the Crusader minor civ is born.
In addition to the spawning effect, the wonder also provides +1 gold to each of the owners Catholic buildings whenever a Crusader army captures a city, stacking up to 5 times.
The Crusader civilization itself has the "Crusader" Unique Unit, which replaces the heavy swordsman, and is well equipped for siege. Again, art already exists.
There's also apparently a leaderhead of Godfrey de Bouillon somewhere, if at all necessary.
The Crusader spawn doesnt flip any tiles like a regular spawn, but acts more like the Seljuks, receiving an army loaded up into boats near Jerusalem.
I threw together a mock-up of how it might take shape:
And this is what the game might look like ten turns later:
Finally, Catholic leaders are given a new event so long as the crusader states are alive, with three possible choices.
The pope requests more men for the crusade in the holy land:
- Give no units
- Results in a -2 diplomatic penalty to all Catholic leaders.
- Give 1 unit
- No change in diplomatic relations.
- Give 3 units
- Results in a +2 diplomatic bonus to all Catholic leaders.
Upon selecting your choice, the appropriate number of units will be taken from your standing army and placed in the Crusader capital city (or, I suppose, in a galley next to Jerusalem if they havent yet conquered anything) under Crusader ownership.
Obviously most of the details, including all the numbers, are pretty arbitrary, so dont read too much into them.