a) I, too, would rather not do the watchtower and do research instead. But this plan is a compromise plan. I would furthermore direct your attention to the "[] Join a raiding party to attack traveling NPCs of another city so you can level and gain money." option. Clearly it is possible, and perhaps likely, that the PC's of our neighboring city will seek to assault our own NPC's. The Watchtower would provide our own PC's and NPC's with forewarning of such attempts.
b) In regards to your write-in, while it sounds like a good idea it also would take an action. We only get 3 controllable actions. At present, we are doing the village (to foster more income), the research (to foster more income, and martial and non-martial versatility), and the watchtower (to protect our income, to make our own raids easier, to have a good idea of the surrounding land). Next turn we will likely be doing an Upgrade to our Stabilizers, possibly establishing an NPC shop or instituting a set of taxes, and one or two research actions. We probably should establish the information bounty, but it will depend on whether other people agree that it's worth delaying research/item-gain opportunities. I would put limits on it and make the rewards for people after the first individual or group decidable per instance. Also, to some degree it's simply better to be proactive.
Edit: I think we have room for like... 3 villages, max, where we are now. We'll have to invade the city across the river sooner rather than later.
We should probably make a bridge across the river first, and then start building villages on the other side or something.
The bounty idea I had was about substituting the Watchtower by it, and have the Watchtower built in the next round, as I don't see ourselves getting attacked so soon. See, we are a kingdom, chances are the other city will have a different type of government and therefore slower to act.
Besides that, I mostly agree with you. By mostly I mean that I don't agree with attacking caravans already. It would build a bad rep of us, and also give a warning to the ONLY other city close that we are enemies.
If anything I think it would be a good idea to scout the city and if it seems unlikely that it will attack us, we let the status-quo stands as it is while we make use of our space to build all the villages that we can and to generally progress and train. When there's nothin' more to gain by waiting we attack.
Also, by having a village between us and the world, we have a buffer in case the next village is both aggressive and competent. Have them spend soldiers battling this village.
AND, should the village next to us be likely to attack us soon, we should take over it as soon as possible. For this, we should plan. I personally have a preference for bounty systems, as this world, currently, is one that everybody is kind of squishy.