The main counterpoint I would have about Vassalage would be from a historic standpoint. When I think about Vassalage from history, it doesn't
really feel like the Vassalage that's represented in Civ4, and that bothers me a little.
The point of Vassalage historically wasn't
always to beat people to a bloody pulp. The point of Vassalage was to maintain a large empire in a relatively organized manner. There was an aspect of strength-keeps-the-peace involved, but it always seemed to me like it was somewhat economically viable along with being useful for military preparedness--and yes, a lot of wars were being fought in that time, and one could crop up at any moment, so there was that to consider as well.
But the point of Vassalage in Civ 4--and let's be honest here and not mince words, here--is to beat people to a bloody pulp. Any other benefits it has are ancillary. In Civ4, there's usually very little sense in maintaining a large standing army (cheap upkeep or no) unless you plan on killing someone with it or defending against someone who is about to attack you. But then, Civ4 doesn't really require you to role-play your warring in general (whereas it does for the AI, to at least some degree). Which is something that sometimes bothers me a bit in itself, and I know opinions will vary widely on that.
Police State is obviously a through-and-through militaristic civic, and I had no intention of arguing for commerce benefits for it. In real life, Police States tend to end up (1) heavily armed and (2) economically strained and (3) pretty darn oppressive and stifling of dissenting thought. Civ4 reflects that pretty nicely as it is; if we were going to change it I'd recommend some sort of harm to commerce or research. Gameplay-wise I seldom use it since I don't usually get into a lot of modern wars by my own choosing, so I can't comment.
I do know I wouldn't want to use Vassalage even in the ways it was used in the peacetime of Europe, because it looks very weak compared to other quickly attainable options. The only time I would maintain it during peacetime (without war being an imminent threat or opportunity) would be during an RPC indicating I must do so. Unless I'm missing something big about the usefulness of the unit support cost reduction from the civic.
The main criterion I was thinking about with the Vassalage idea was the part about making a particular decision-making process more interesting. It would, at the very least, do that, and it would be challenging to argue that the effects would be gamebreaking under most circumstances. (More so than a good Bureau capital is, at any rate.)
The main reason my creativity was focusing on Civics, I suspect, is simply because that's "where we were" with the discussion about the Serf tweak. It's definitely a valid aspect of the game to look at.
If you would like to focus on something else I can focus on something else; I'm mainly looking to generate ideas that would hopefully be fun for people to play with, pretty realistic, and make the high-difficulty game a bit more varied and less of a repetitive exercise in building the deadliest army (or Super Bureau Cap, or Cottage Spam FS Land, or State Prop Production Empire--etc.--as the map dictates) that one can manage to construct. To help the strategic elements be somewhat more varied. Because I do eventually get tired of running tiny variants on the same strats over and over again just because they're obviously better than the alternatives in 70% or more of the situations I run into. (That was one reason I really liked the Lib race changes--it put some vigor back into the high-difficulty mid-game for me.)
Edit p.s.:
TheLazyHase said:
A thing that may work : remove the tech restriction from lumbermill, put it at +0 base, and add to replacable part (or whatever tech give the lumbermill) +1 hammer. This way, you have a placeholder mill for where you want to cut wood. It's not totally useless : it give +1 commerce when near a river.
That was something I thought of as well, this morning. Possibly have it come in at Machinery instead of R.P. and be exactly the way Lazy described. It's a thought. My main concern was that it might look very counterintuitive to build an improvement that was purely a placeholder (except when built next to river tiles). Hmm....
Edit p.p.s.: The espionage boost from Nationhood had slipped my mind in my considerations. Just as a note. I now tend to agree it probably doesn't need much if any help, for that reason, although the flavor of +1
on forts under it is still intriguing to me. Although this might be because I live relatively near the Ft. Campbell, KY air force base and have seen some of the interesting things that does to local commerce. *laughs* (Some very good restaurants sprang up in the area on account of military-related traffic, among other things.)
on farm would be. 
Caste (GPP) and Slavery (food into hammers) are already so powerful that having something that is applicable for increasing raw commerce doesn't seem so bad. (Emancipation also does that indirectly, but the biggest effect on most of my games from it is simply having to switch into it to avoid unhappiness, which nudges the economy to sorta balance itself a bit and become more hybridized or cottage-driven).
