I like the idea, especially with the ability to add trading posts, etc. Perhaps also having it depend on the local region would be nice too.
I.e. If near water, can be upgraded with fisheries, if near grassland, can be upgraded with ranches, and if near a road, it can be a trading post.
Further, I'd prefer if the outpost is to be upgraded, when the enemy attacks them successfully, they'd simply switch sides, rather than disappear.
This not only makes more sense logically, but also make it far less annoying as the AI tends to backdoor a LOT!
However, with the upgrades, a limited number of outposts will definitely be needed to be set, (distances between other outposts)