I've always loved this mechanic in any game I have played that has this, but I really doubt SD will be able/willing to make this change at this point.  It has always been weird when you conquer a city and the inhabitants magically change race/culture to yours and still have an occupation penalty.  I think it would be awesome if in some way you could keep the inhabitants race, but I doubt it will be changed.  One, it might not be possible to do, second if it is done, it might open up a Pandora's box of other problems.  

Hm, some games did this ok, other games with this feature were ruined by this feature...

A game were this feature ruined the game for me is "Warlock: Master of the Arcane", since it completely killed re-playability for me being able to explore every single unit and feature on first playthrough, if you keep this mechanic out you can spend more time making each separate faction more interesting.

If you don't have time to make factions more interesting (I figure Stardock didn't have that for FE) you could run a feature similar to this, the only thing that bothers me is the current way "Unit Designs" work, I would have to design units around a stack of units with a different racial ability, this becomes rather obvious in difference when it comes to trog vs wraith units, will I be able to construct units with special traits only allowed to the Wraith faction, Will I be able to over-encumber my Wraith units due to Trog's unit designer thinking I have 50 weight capacity and not 30...

So while it might be an interesting idea, there is a whole river of features to build a bridge across.

Sincerely
~ Kongdej

I disagree, I loved the mechanic in Warlock, and was implemented well.  you could get access to other races, but those cities had penalties if they were not of the same race as your main.  Do you keep the city with penalties but access to other races, or do you raze it and build your own unpenalized city.  

Hm, I think the suggestion wasn't aiming toward their techtree (prereq for Juggernauts is, after all, to research that tech first) but rather towards the race bonuses. To use Trogs for heavy armoured infantry for example .

Now, it's getting a little complicated but probably would be doable to produce the units of a given race only in that city. Basically, you could design a Trog unit, but you would only be able to build it in Trog city.

I like the idea, by the way. But there should also be an option to revert to your "starting" race in time if you so choose. And of course, some production and research penalty if you don't want to revert the city to your race.

I was under the impression that conquered cities remained the way they were. I think i've seen Fallen cities retain their art style after being conquered by my Kingdom faction. Or do you mean that you should be able to use the conquered peoples as army recruits?

Hmm ... if you focus on race ONLY, and not special units attached to that race (ie Golems, Slaves, Juggernaughts, Henchmen) ... I think it could work!

I mean, you could have Tarth scouting parties, Trog heavy infantry, the works!

For this to work properly
(properly as I would have it work, where your Tarth slaves are still able to move full speed through forests)
it would require some re-tooling of the mechanics, either that or it gets slightly odd, that said it would be fun to see a different blood ability being used due to having an excess amount of Tarth slaves.
It could even be limited to 1 faction to be able to use other faction's units as troopers.
(So its a unique faction ability to enslave other faction's population and use them in combat, think Magnar )

I like to think that I have the Tarth population still working for me, but its still "trog" troops I produce, since my empire can only really put its trust and weaponry on full-bloods.

Sincerely
~ Kongdej