Going to keep an eye on this since it's been ages since I've partaken in a FE-roleplay, never mind worldbuilding for one. xD

I think the setup should be based on what sort of roleplay you're aiming for.
For example a kingdom/nation based roleplay would differ greatly from the setup of an RP where the characters would play the role of a wandering band of heroes. The setup would equally need to be changed if you intended to have all the players play on the side of one of your aforementioned kingdoms.

Personally I think it'd be better to have 3~4 kingdoms so that you can play with the political aspect of things as well. It might be a bit harder to control, but it adds an extra dimension to the roleplay, and prevents every character expressing the "I hate the other kingdom" trait. It's a good trait to have, don't get me wrong. But when you have a dozen characters all going "Grrr, my kingdom's better" it gets a bit tiring. If a third kingdom is added, it could be minor and not directly involved in any fighting.

Additionally/Alternatively I also like the idea of incorporating a few tribes into the middle region which could be a variety of biomes. Desert, Forest, Plains, Swamps, etc. In regards to manakete's... they'll probably need to be toned down, unless someone wants to play a 'civilian' character who normally has no combat capabilities (But can transform in dire situations, though with severe drawbacks). The idea of letting them transform at will, or letting them go SuperSaiyan (I'm nearly dead... POWERBOOST!) will probably detract more than it'll add. I personally prefer a more Laguz approach in terms of power levels.

I'm not sure if you intended to have some sort of 'unknown enemy' coming from the far north, but I personally think it'd be interesting to have them come from the middle in overwhelming numbers, threatening border control, and screwing over road access between settlements.
(Again, this would depend on the plot setup you want, it'd also be interesting if characters were forced to be part of the North, and then have to fight off an unknown enemy from the North, and an opportunistic South army).

As for overall lore? I'd personally like to see something revolving around racist persecution. Preferably with a 2nd or 3rd race. Humans are a given. But I think it could be interesting to include a race with elven characteristics, perhaps they had an expansive kingdom in the middle in ancient times, but they were wiped out, or invaded by an alliance of the north/south in an era only recorded in the dustiest of tomes?

Think I've ranted enough, so that's just some food for though xD