Have a look at the Kingmaker Adventure Path, its includes rules for city building and the like
The only rules that govern large area interaction that i know of are in Kingmaker campaign setting - but note, that they are focused on governing, and not interaction (even though there are rules on warfare, they are not designed for campaigns and tactical combat, but rather for battles and skirmishes). I would suggest another route, one which is pretty time - consuming, but works well (it proved to be ffective in large - scale vampire: the masquerade campaign, and let the GM create a realistic map of europe):
- design random encounter tables governing historical events, and later go down to regional "encounters", local, etc. Essentialy, the farther an area is from PC's, the less interaction they will have with it - and thus, it is not essential to have everything ready, but some data is necessary in order to create realistic NPC's which come from foreign countries, or have some interest (especially political or commercial) there.
- while going down, it is essential to create agents of changes. For each nation, there is some ruler - and he probably has some means of interacting with his countrymen (feudalism leads to an easy and pretty intuitive hierarchy, although there are some problems, especially concerning religion and magic - are they included in the hierarchy, is there some interaction, laws concerning them?) for each action on regional level there will be agents of change - and they will conduct those actions according to their own style, reasons and means of carrying it ( a war can be conducted in a gentlemanly manner, with knightly ethics and duels between champions - or it can be a painful affair full of rape and plunder). this will read to some reactions (again - random encounters, and agents). Some tinkering may be necessary to keep the word logical - i would give it highest priority.
- most of PC's actions, especially on low levels would take place in towns or wilderness - it will take some time until they will be able to influence whole cities, and even more to take hold of some kind of a fiefdom. At this level, random generation of side-plots and related NPC's will be handy - some might be planned (for example, a liege lord controlling the area, who will be tied to some main plot), but in the same time, if you have a metaplot ready, tying random NPC's to it will be perfectly enough, if you can think fast. If not - have some basic characters (when i run such a campaign set in medieval europe it was about 20) ready, and use them to lead PC's to relevant actions. Please remember -even if a merchant is only passing through a town, he may be a part of a bigger trading company, or have some connections - this structure is much more important in creation and running of a large - scale game than local events, which can be only a means that some powerful person uses to lead his employees to action.
Last advice, but pretty important - remember to keep world alive. It will be a long time until the PC's will influence it in a meaning way (defending a village is certainly important for them and its inhabitants - but not much more), and many events will be only observed by them. Optimally, they will start to plan ahead and use upcoming events for their own benefit, and it is vital that they receive enough information to do that.
Sadly not - it was pretty informal, but i will lok through several blogs providing quality resources for sandbox campaigns - I think, that I remember several with random encounter tables which are used in my pathfinder campaigns (where i play, but I know some of GM's tools as I helped tyo design them), and will send them to you - it will cover the "lower" part of structure nicely, and i think that the "world movers" must be designed for each campaign specifically.
talking about agents, here is and example from my pseudo-medieval campaign (the world was similiar to late medieval europe, with very few fantasy elements, and i wanted to make diplomacy and espionage the focus of gameplay).
The city where we played was called harnost - a medium-sized merchant city by a sea which connected most of the civilized countries. It was rebuilt after a major war in which it was razed (100 years ago), and despite this difficulties, and poor means of farming(low crops), it managed to become a center of blackmarket trade and military technology development (resources in nearby mountains allowed citizens to tinker with cannons, handguns, and similiar modern developments, which helped city's defence gain upper hand in some minor skirmishes).
mechanic of the game was simple: there were several movers in the city, one of which was governor, Count von Harnost, and there were others - foreign diplomats, black marketeers, ambitious local politicians sitting in the city council (city government was based on Polish Gdansk - the city has very interesting history and political structure governing the interactions between council and nobles, and was quite strong politically for a very long time, having defend the title of free city reguralry)
essentialy, each time a major encounter was generated, each of them (around 10 major npc's, which later interacted with themselves and players personally or through minions) would take stance, and eventual conflict/ shift in power would be resolved. The events leading to that would create the space, in which PC actions were possible. High level play was trickier, as players would influence other regions through their representatives, receive more detailed information and create organizations, but the mechanic was unchanged, except the space of action was generated by interaction with even more powerful beings (think of kings, dukes, high priests, wizard guilds, etc), and such players could create space in which lower level pc's act (due to the actions they want to happen in area they play in).
coming back to the example NPC:
count von Harnost was settled politician, whose main aim was to help his family grow in power (4 children - full NPC,s, and a random generator of cousins. In asumed that he buried two wives already). He was very lawful person, who had huge problems with crime running wild in his city, and keeping it in check while not letting the commercial influence of the city wane (black market IS a market, and most of the goods are legal, if stolen - not a lot of merchandise was banned. think of heretic books and like. XVI-XVII century Gdansk dealt in drugs bought from colonial empires, i remember). He did allow spying activity in his city and had contact with most of "official" spies, in the same time building counter-intelligence network of his own. He had huge personal revenue thanks to having several mines in his fiefdom, but had very low influence in the council (being a noble in a city council consisting of merchants, he had to act carefully), and thus - low influence on city affairs, and had to act diplomatically, and through allies, and not hard orders (most notable fact: his personal guard was allowed into several parts of the city only - and he was voted out of influence in the city guard over the course of the campaign). What followed was description of his relation with most important NPC's (he could like someone personally - but if the persons employee was his rival, he couldn't help but defend himself. Please remember that fact, and dilemmas it leads to), and the structure (aims, relations, non-personal means of action, e.g. large - scale magic, persons he must obey, and persons he can order to do his bidding) led to resolving major events (normally - no more than one per game session, sometimes 2, often none), and minor events(major event - driven)
I have just the thing for you: Dawn of Worlds. http://www.clanwebsite.org/games/rpg/Dawn_of_Worlds_game_1_0Final.pdf
It's basically a free form world building rpg that you can play in a few hours to create a world with an general history. Best of all it involves your players so they feel involved in the world from the get go. I've used it twice for creating settings for Pathfinder campaigns and I really like it.
A friend and I and a few others have been working on-and-off over the years creating a timeline for his campaign world (that rtf is "the lite version that covers only the game area and closely related stuff. The regular one is four times longer and covers the entire world (and is a constant work in progress"); basically a collaborative effort of 1) mining IRL history for some stuff and 2) mining myth and fiction for some stuff and 3) imagining whatever.
He wanted a sort of alternate-fantasy-but-recognizable-IRL-counterpart type of world.