You pretty much just described Tera's political system. Players are elected to serve in each game area and they can add in vendors, banks, and other things. They can't add in defense or anything though. And TESO will have an emperor through PVP but far as I know there has been no word on just what they will be able to do/modify in the game world other then be a target for every other player in the game.
One massive server per region means that it's going to be hard to do and even harder to keep for any period of time imo. Also have a good feeling that having 3+ million people playing on a server is going to mean lots of lag ... really hope they can find a way to control it or people will turn away from the game.