The attacker and defender [i]always [/i]get two free dice.  If an outside party received no dice, like the traders, then there's no point for someone to have even said anything about them being in the conflict.

Yes, the faction's power is added to the die roll.

In a way, yes.  But this takes place on a separate piece of land isolated from the rest of the world.  And there will be no map, so we're not going to know the borders, boundaries, and limits of kingdoms and such.

I prefer fantasy.