Aside from the trade deals the only purpose of the entire Governor system is RP. Granting any more power to the system would, unfortunately, result in even more abuse of the election system. As it stands, many citizens of Siege have multiple accounts, and therefor multiple votes. Guilds and alliances can spread their votes out across any number of cities they choose, to assist their guildmates or friends. Players can 'encourage' citizens from far off lands to come to Siege and cast a vote that has no meaning to them. There is no way to 'fix' this, as these are all legitimate methods of garnering votes. Just like real life politics, there is much I dislike about the system.
I really like Otto's idea of only one guild being permitted to hold an office... although that would likely result in more empty sets. In that event, THEN the King could appoint a 2nd player from the same guild. I think this is actually something that can be done to the system without discriminating against voting rights. In the end tho, people would find ways around it. I can already think of a few.
So, while it is far from a perfect system, it does have potential for a lot of fun!
Governors can grant titles, such as Sheriff or Architect. That character would have certain duties to fulfill. Perhaps search out script miners around the town. Perhaps some VvV tasks for the towns, or roles in setting up certain events. One could manage a shop or NM stall to help raise funds. This does not need to ALL fall on the Governor alone, and there are people who would enjoy these roles.
You could post 'wanted posters' of a sort by using the town bulletin board. Offer a reward for kills (with pics!), etc. Perhaps the local bears are a nuisance to the miners, so wanted posters for the largest black bear trophy!
Each shard is permitted a bit of diversity. There are decorations scattered about that make each shard unique from the others. If enough interest is generated, I think it would be possible to arrange an event where something special is permanently built in a city. Nothing that impedes traffic or blocks a house placement, just deco. Have the construction take an entire term of office maybe, with updates being delivered at monthly council meetings and all manner of stories for the delays. A garden, a statue, perhaps a small building made of stonecrafted materials by the players. Lots of ideas come to mind! These would not require any special items to be created by the EM, and I believe can be locked down permanently by PEC with permission. It seems doable.
I agree that the system could be built upon more than it is, but with some imagination and energy there is a lot that can be done with what is already there. I think the system we already have is not used anywhere near its potential.