Suggestion...
I would suggest the ability to also have dictatorial cities, with, instead of a mayor, a lord/lady (noble of some kind). The elections for a town like this could consist simply of a duel to the death for leadership or gold bids on the title.
* Dueling would be between the leader and the challenger (with a possible tournament system where the incumbent fights last after the other candidates have fought a battle royale or a tournament to get to him or her in cases where there are multiple parties fighting). Would suggest both players having to be online to start a challenge, and the duel would commence perhaps 10 minutes later. If either party doesn't show, the one that shows wins by default. If neither show, the incumbent remains in office.
* Gold bids on the title could be simply handled as Who is willing to pay the most for the land? Roleplaying-wise, Lord British would accept a cash gift to favor the current lord or a new lord of that town. The bidding could last for, say, 7 days, highest bidder pays the money and becomes lord of the town.
Of course, anyone dueling/bidding would have to have a house in the city already. This way, you could have a democratic system, a dictatorial system, and a noble/merchantile/royal system, and that might create ideological conflicts with cities that do not share your type of system.
In wars, the winning city could change the system of government of the town, and changing the city's government type could be set to a timer of 28 days (ensuring that if a democratic system is installed, it will last at least for a month before it could be changed again). The mayor/lord/chief of the town could be responsible for changing/selecting the system of government of their own city, as well, in case they wanted revolution to change the system. (This, of course, would dramatically decrease the treasury, destroy some town improvements, and etc.)
Maybe the themes of towns could change a bit depending on your government, as well; dictatorships would have more militaristic/dark/evil-looking towns, democracies would have more functional cities, while royal/noble towns might have more extravagant/rich decorations.
Just some thoughts. Thought these might be interesting/cool to have in the system.