In your campaign, how are you running Neff? Specifically, how does he react to news or rumors of the exploits of the adventurers?
According to the backdrop article in 124, much of Diamond Lake's original economy was founded on treasure from the nearby cairns. I'm assuming there would be laws in place for the Governor-Mayor to assess taxes on this loot. Does Neff has jurisdiction over the hills? What is a fair assessment of taxes? The DMG suggests 20%, and I'm assuming Neff would extract every copper possible.
How would he learn about the treasure obtained? Would he give bribes or threaten extortion to Tidwoad, Taggin, Tyrol Ebberly, etc? What about Allustan? Would the "neutral" wizard provide tips to his brother?
What about the possessions of the cult? Would the law transfer ownership of these possessions to the adventurers?
Who would administer the law to Dourstone? I'm not sure how it would work in Greyhawk, but in Eberron I don't think the administrators in Wroat or Sharn would even raise an eyebrow about cult activity in Diamond Lake. There are a large number of Dark Six cults in the lower wards of Sharn alone. From the more metropolitan Eberron perspective, simply revering evil doesn't seem to justify a huge cause of alarm by the majority of leaders in Breland. I'm guessing they would just want to know the bottom line: how does this impact ore production? The area is probably generally considered corrupt and full of vile miners to begin with, so it would come as little shock to find out that some of the residents cope with their miserable existence by torturing themselves and wanting nothing more than apocolypse. I think they would leave the matter up to Neff.
WC implied that Dourstone was under some type of possession or domination during Smenk's tour of the cult. 3FoE has a one sentence line about using magic to control him, but what exactly did the cult do to him? One of my players has a psion character who read Smenk's mind and knows that Dourstone was acting "unusual". Another player has a paladin who is aspiring to be an exorcist and wants to know how to detect if there is some type of possession involved. Is it simply a charm spell?
If Neff seizes all of Ragnolin's assets then all of the mine managers will scramble to acquire the rights to the dwarf's successful mines. Smenk obviously has the advantage, and in my campaign he is not convicted for his dealings with the cult. In fact, Neff will commend him for selecting "hirelings" to aid brave Balabar after he uncovered the operation. How did other campaigns deal with this major economic shift?
Also, what happens during an attack in Diamond Lake? For example, when Ithane attacks, where do the townsfolk go for protection? I'm assuming Neff would be required to open his gates and require all able bodied men to defend his manor. Would the militia primarily defend the keep or aid Neff? What would the mine managers rely on? Considering the importance of the mine managers I'm surprised they haven't pressed for city walls.