I think the main reason why conquering all of Calradia is the most popular game path for players is because it is currently the one that offers the most sense of actual game progression. You can fight bandits and do quests for all of eternity but nothing much will change, and it gets boring. Trying to conquer Calradia actually gives you a long term goal and visibly changes the landscape of the game.
If we want other types of game paths to be fun and viable, they need to offer some sense of progression and/or change the landscape of the game world in some way.
One possibility that comes to mind is creating several independent, long story arcs that can be undertaken by the player at the start of the game depending on the player's actions at the beginning of the game. This would not exclude the possibility of eventual domination of Calradia, but completing a single story arc would, in itself, give the player a feeling of a fulfilling, complete, single player experience. From there on, the player could try to conquer Calradia or he/she could start a new character and try a different story arc.