Reposting from Beta Suggestions:
Here's an idea. Instead of taking over PC cities why not enslave them and levy their economies?
That could be time-based (or at any point the conquered would have the ability to refuse suffering a penalty).
On the guild rooster the conquered would appear as: annexed territories for instance.
This way players would have ability to rebuild their cities and fight the agressor from within, to wait out so they can strike again or permanently join the guild that conquered them if race requirements are met.
Possibilities are innumerable. Perhaps even the conquered could work on the battlefield much like mercenaries for the ones that destroyed them?