I have been recently reminded that 4E currently has no way of managing characters running a kingdom (as a group or even as competitors) or leading armies, and in thinking about those things it seems to me that the skill challenge mechanic is ideally suited to just such applications.
Rulership & Paragons
Firstly ruling a small dominion such as a barony or duchy is a pretty logical thing for characters to achieve in Paragon tier, though there are ways and reasons to do it in the other tiers. In Paragon the PCs are important figures that other important figures ask for help on the level of equals, and a good way to establish that is for the PCs to be rulers, and it makes a clear division between Heroic and Paragon if at the end of the Heroic Campaign arc the characters are rewarded with their own dominions. Now they are Paragons in part because they are rulers of the land, and that automatically gives their new roles a greater scope.
Not Just Numbers, A Story
The first thing to realize as a DM is that the dominion is not just a bunch of numbers, it and the way the PCs interact with it, are a story. Of course as with any other part of the game the DM should be guiding and influencing that story. If the PCs’ dominion doesn’t matter to your campaign it should, the story then also needs to have reasons why the PCs would go on adventures if they are rulers of a dominion. But whole new types of stories open up in the pursuit of a story based around being rulers.
War & Diplomacy
The two most obvious things to do with he rulership of a dominion is fight with other rulers (or marauding monster hordes) and engage in diplomacy with the same. The applications of skill challenges to diplomacy are fairly straightforward and are adequately covered DMG1 and DMG2.
The applications of Skill Challenges to war are far less well covered, with Mike Mearls writing two articles on how to put the PCs in a large battle with skill challenges as the only articles on the mater that I am aware of to date. In the articles Mearls provides a general overview on how they can be used (DDI) and then an example (DDI). But it is worth looking at the process in a little more detail, especially when the PCs go from being “part of” the army to “commanding” the army.
The first thing I would do is take a leaf from the Legend of the Five Rings RPG’s battle rules, and decide the outcome of the battle. The advice is sound, as the DM you should decide who is going to win the battle, not leave it up to chance. Keep in mind we are talking battles not the over all war here as well. The outcome and story of the war then becomes much more dynamic and the players can look back and see how they affected the story and outcome over the course of the campaign. Als0 having a decision made about the outcome works much better with the skill challenge mechanic as well, because then your skill challenge is determining the impact your players have on the outcome which makes the distinction between success and failure easier to make.
For example if the story needs the PCs to loose the first battle, then the skill challenge is about how badly they hamper the enemy forces for the next battle. If the PCs are successful they delay the enemy for two weeks, and are able to reinforce their own positions. If they fail then the enemy advances too swiftly and the PCs are at a disadvantage for the next confrontation.
Hopefully it should become clear how using predetermined outcomes will allow the campaign to build towards a penultimate confrontation between the PCs and the commanders of the enemy forces in the last great battle that will determine the outcome of the war for once and for all. It should also reveal opportunities for the PCs to do things that only the PCs can do and intermingle special missions into the greater arc of the war as a whole, and how you can use those specialist missions to determine the outcomes of battles before the battle is actually engaged. (Example: the PCs learn that the enemy has recruited a dragon, so they can go to its lair and remove it from the equation. If they succeed they will win the next battle, if they fail they loose it etc).
Plague, Famine & Civil Unrest
Much like large battles can be well represented by using skill challenges, so can the routine administration of the kingdom. Suddenly those skills like Nature, Insight, Diplomacy, and Intimidate take on whole new meanings in the game when they are being used to get whole dominions to follow the characters’ instructions. The largest problem is making sure that you are not setting a given character up for failure in these sorts of challenges. The characters need to be able to complete the challenge and so rather than affecting 1 PC’s dominion make problems widespread through their dominion so that each character can bring their expertise to bear on the situation.
This then allows things like strange plagues to spread through the lands, and the PCs can combine their skills to keep the people safe, and search for the root cause of the problem (it is a fantasy world, the root cause should never be mundane) until at last the PCs are able to rally together and personally go and deal with the “big bad” behind the problem. Similar scenarios can be developed for famines (eg The Labyrinth of Gedref episode of Merlin) and civil unrest (eg By Any Means Necassary episode Babylon 5).
While I have not (yet) provided a specific example the above should hopefully give you some ideas on how to manage these sorts of things in a 4E game without having to bolt on new mechanics. The key, as with any skill challenge, is to make it about the story first and foremost, and providing the players a means to influence the story without them necessarily having it left to chance or totally usurping it (not that they might not totally usurp it of course).