No one has forbidden the blue hero from attacking Giovanni, although it might be worth changing that.
You can transform the city by having Arantir enter an already captured city. As for hiring humans, that's up to the player.
This bug has not been fixed yet. You need to click OK many times, and then it will stop. The problem is with the AI visiting a scripted object.
Hmm. Maybe Giovanni was just afraid to attack Kaspar?
Added 3 minutes ago
In short, it's clear. The map needs to be made more difficult in the middle. Okay. This is better than making it easier.
Added 1 minute ago
The next version will definitely be better.