Thanks for the answer! I was just worried that the game might not count you being Independent if you're the leader of a pre-existing faction.If you become ruler of existing non-empire faction then you have founded a kingdom and you can speak to Azargos to go down his path. Istiana requires you to join or rule existing Empire faction and convert map to Empire. You won't be locked out until you commit to one of them.
And thank you for the further information! The first point isn't an issue for me, as everything besides being the ruler of my faction (Southern Empire) has already been completed. I've got excellent relations with all of the Southern houses, my clan has reached Tier 6, has a current treasury of 2.64 million Denars, and owns 15 fiefs, and Ira being married to a Khergit means she can't inherit the Empire, so hopefully all I really need is for Rhagaea to pass on.There really are two issues, and they don't necessarily overlap.
1. Becoming the next-in-line for a faction requires whatever steps you need to take to work yourself into that position, and then become de facto leader of the faction;
2. Once you are the leader of ANY faction (imperial or free peoples) and speak to one of the quest givers about your final decision (continuing on with empire or burning it to the ground), and THIS conversation will activate a specific quest related to the main story. You can have this conversation long after becoming faction leader, as you have 10 years to return to them with your decision (o you have plenty of time to set things up for success)