I've never found any benefit to doing the main quest, just penalties. I no longer even attempt to complete the quest. As far as the time limit, I believe that is based on the people you have to talk to. It tells you to talk to 10 people. Eventually they die off (old age or battle). Once there are no longer enough people left to talk to it fails. This is one of the few logical parts of the quest.
As far as wanting to become your own ruler, the quest lets you become a king at clan level 3. If you don't do the quest you can still start your own kingdom when you reach clan level 4. In my opinion starting a kingdom at clan level 3 isn't a bonus to doing the quest. If Taleworlds thinks you have the capability of being your own ruler at level 3, then they are penalizing you for not doing the quest, they aren't rewarding you for doing it. It would be different if Istania or the other actually gave you a bonus that helped you rule your kingdom, but instead they just give you more problems. As an example, having the Banner and being part of an empire or starting your own empire faction should give you a bonus to relations with all empire culture lords. It could make it cheaper to get them to join your kingdom. It could maybe make it so the other empire kingdoms ally themselves with you or something. Instead the quest just gives you a ****load of enemies attacking you all at once.