Empire Total War

[North Suran]

I lead Greater Iran to war against the Ottoman Empire, the Polish-Lithuanian Commonwealth and the Maratha Confederacy - and prevail!

Until the latter conquered my capital and sent my eastern forces scattering like Japanese school girls.

[North Suran]

If I were to conquer it's capital and the territory that wasn't a nation by itself, would that cause the former nations to declare independence and reform?

The only way to restore a nation is to drive their home territory into the ground by burning all popular buildings, removing your forces from the central city and ramping up taxes.

One of the poor things about ETW, and why the Europa Universalis series is probably superior.