Grand Role-Playing for fun and Loyalty...?

[Pansy Overlord]

First off, let me begin by saying we’ve got a permanent Loyalty penalty, and we totally deserve it. I will not be arguing for any kind of way to reduce this Loyalty. I will be doing the normal thing of building structures that benefit the three kingdom statistics.
I plan to run a Kingmaker game for a different group of players after I finish this game, as I do not want any spoilers for the current game. I wanted to introduce a mechanic that, if the players initiate it, would help lessen the permanent penalties they acquire through poor choices. Now, I would imagine such things would be a double-edged sword that could completely hurt the players if they so utterly fail at their attempt.
Let’s take the even that inspired me to figure a way to incorporate the mechanic I’m pondering into a future game:

Why you should never let the Chaotic Neutral (stupid) guys off their leashes.

Spoiler:

Our government is a trade federation of independent city-states that all sign the Kinship Accord. Well, they’re not totally independent, as all building proposals and agreements must go through the Guildslord (aka ‘Ruler’). It helps, too, when you install the other PCs as Lord Mayors with additional duties (aka other leadership positions). No game mechanics were harmed in the changing of names. Anyway, the appointing of other PCs as Lord-Mayors was a way to let the different characters have individual RP based on events and the like.
Ardish, Lord-Mayor of Pescapneuma and High Admiral of the Merchant Fleets (General; now Marshal of the Highway Patrol) finds he has a rabble-rouser in his city. As it is his city he is the one to deal with the problems. My character offers to advise him on how to deal, politically, with the situation, but he refused, which is all cool. As Ardish marched into the center part of the town, the first thing he does is throw a spear through Grigori, said rabble-rouser. Unfortunately, Ardish is brutally strong, and ended up felling the poor soul in that one throw.
Needless to say, the nobles of the city and heads of the merchant families didn’t care for this utter travesty of justice, not to mention a likely violation of a River Freedom. Thus, we were given the permanent -2 Loyalty penalty.
To add to the fun, the event rolled for the governing session for the month was “Feud”. It was explained as the heads of such families demanding justice for the Admiral’s huge mistake.

Now, with this example of horribly-applied justice, I would think something this would work:

Spoiler:

As we had Ardish take some “alone time”, the rest of us went to deal with the cultists of Gyronna, who also showed up in Ardish’s city. We managed to sequester the individual worshippers, and we captured the cleric. Now, to soothe some ruffled feathers, and to show that we are in fact a just society, a huge public trial would commence in the Guildhall. The PCs could be the prosecutors, and the GM (or even another PC) could be the defense attorney. If the players make this a nice, long gaming session with no combat and few dice rolls, would something like that help to reduce any permanent penalties provided that the RP session is somehow related to what caused the penalty to begin with?

Question: Would you, as a GM, do something like this for your players? Something like that could encourage RP, and rather than give an RP experience bonus, have it apply to the penalties instead.
This is just an idea I’m toying around with, as I said. I would love to hear arguments for and against this. Thank you in advance for your responses!

[DM_aka_Dudemeister]

Sounds good, as a GM this is exactly the sort of thing I do all the time. Last night I had the party attend an "Inauguration Ball" in Restov, where Varn, Drelev and Thundershield (PC) received their second charters and noble titles. All night the only checks that were made was some Perform (Dance) checks during the dancing portion of the ball.