This may not be a bug as much as a design oversight. Either way, it felt wrong.
Around turn 100 I met the Tarth. I'm pretty noob, so I had roughly a 25 kingdom rating. The Tarth had about an 11 kingdom rating. Immediately upon meeting them (without ever actually entering their territory or engaging in a battle with them) I went into the diplomacy screen and declared war on them. I then noticed that I could offer to accept their surrender. The Tarth apparently did not want to play anymore, because they gladly surrendered to me and became my vassal. This is on the default (normal?) difficulty setting.
This is a pretty anticlimactic way to eliminate a faction.
Otherwise, I'm loving the update so far. In general, it feels like a big step forward. Good work