The problem with your plan, Chowda, is that the CEP could have done whatever they wanted to "revitalize" the Caldari State, they didn't need Tibus heth to do that. The CEP is simply, as someone else pointed out, a place for the megacorporate leadership to come to a consensus on the few matters of national policy that can't be decided at the corporate level. Clearly, you can't have every megacorp conducting its own foreign policy, each one trying to give the Navy it's own orders, enforcing different financial regulations, etc. However, if the megacorporations collectively decide to do something, there's nothing that should be able to stop them in the State. There's literally almost no civil government in the State, from what we've seen -- what little there is seems to be very focused on two things -- defense of the State (the Navy) and ensuring the stability of the financial system (the CBT, the House of Records, and Caldari Funds Unlimited in its new incarnation). Keeping that in mind will probably lead you on the right path towards understanding how power works in the State. There are no elections (except among shareholders) and there is likely no civil police (aside from Tribunal agents and maybe military police/counterintelligence agents).
The CEP doesn't dictate direction so much as provide a consensus among the megacorporations. As someone else pointed out earlier in the thread, it's better to see the CEP as the European Parliament to the megacorps' Germany or France -- not like the US federal government. It's a very weak body without the support of all its members.
When it comes to "who gives the military its orders," I suspect the Caldari Navy, and its CINC, have a lot of autonomy compared to the military in the other major empires. There's a couple reasons for this. First, fears of a military coup are not really going to be an issue when each of the megacorps has their own individual armed forces, and I'm sure the Navy is probably only as big as 2 or maybe three of those combined at best -- notice how in the invasion of Caldari Prime, the Navy needed to get help from the megacorps, and that at least a lot of the logistical work for the Navy is outsourced to the megacorps. A military coup would go very poorly as soon as the megacorporations started sending all those supplies they were making to their own troops and not to the Navy.
Second, the Caldari Navy is very focused on defensive action, and does not have a lot of the infrastructure necessary for long-range power projection. That makes the chances of an adventurous commander starting something he shouldn't unlikely; most military forces are deployed very close to command and control centers, so oversight is pretty easy to maintain. If they did try to start something, it wouldn't take long before the megacorps would yank on the chain and bring things under control. Anything major -- like an invasion of Caldari Prime -- would be obvious early on in the planning stages to any megacorporate intelligence service worth noting, giving them plenty of time to stop them. That was another of my problems with TEA, where it sounded like Heth started conspiring with the CINC of the Navy to begin his invasion early on without the CEP catching on...which I just can't buy.
When it comes to deciding overarching strategy, that's probably decided in a "war council" that would include all the megacorporate CINCs (such as Mens Reppola before his promotion) and the CINC of the Navy, since they would need to act together anyway. The CINC of the Navy is likely "first among equals" in this situation, and has a station similar to SACEUR in NATO.
I do agree with you, Chowda, that you can change the game world considerably without breaking it; that was one of my big problems with TEA, in that everything that happens in the book -- or at least the end state -- could probably have been accomplished without playing fast and loose with the personae that had already been developed for the various empires. If I had been doing it, I would have made Heth a minority shareholder in KK, someone who was getting frustrated watching Oiritsuu let the company go to hell (as he saw it anyway), and you could still have the labor uprising, only now Heth is not some mope at the factory, but the shadowy figure behind it, leaking what's going on to the competing megacorporate media and devouring the company on the market in the turmoil (perhaps even with the help of the Broker, who can continue to be the money behind the operation).
Heth uses that to engineer a takeover of the company and put Oiritsuu out on her ass, then begins trying to push reforms through his new megacorp, which likely get him attention from the other megas -- some good, some bad. He starts speaking out about a rot running through the Caldari State, and how they need to get back to their principles, something that probably gets him a lot of support in both the Patriot and Liberal camps. He starts talking about how the Caldari have forgotten what made them great in the past, how they need to return to their roots, starts talking about Caldari Prime...
Now the Gallente are getting nervous, especially watching tension escalating between the Amarr and Minmatar. They start reinforcing their border, which the Caldari have ALWAYS seen as a threat (look back at the Kassigainen riots), and Heth and the other Patriots start sending warnings to the Gallente to back off or the State "will take whatever actions necessary to defend itself." Of course, the Gallente take this as more of a threat (and rightly so!), so they start making some internal preparations for an attack and tensions continue to build -- violence between Caldari and Gallente on Caldari Prime escalates, maybe helped a little by the Broker's agents provacateur (perhaps even without Heth's knowledge).
Otro Gariushi tries to defuse things by proposing a meeting between representatives of the CEP and the Federation, and offers to lead negotiations between the two because he has the best relations with the Federal government. They have the meeting in Kassigainen, and Gariushi goes there aboard his flagship. Kassigainen's security is largely in the hands of the Patriots, however (I'm pretty sure they own most of the stations in the system) and during the meeting aboard Gariushi's flagship, "something" happens -- no one is really sure who starts it, as everyone is pointing fingers at everyone else -- and shooting starts between the two fleets. With tensions already running high, the Patriot security forces in the system are hard to stop, and outnumbered and outgunned, the Federation forces are fighting back as hard as they can. The commander (could still be Noire too) is killed early on, and his replacement assumes that the Caldari have betrayed them and orders a counterattack, seriously damaging Gariushi's flagship and killing him (and the Federation delegation still on board). Eventually, many of them manage to withdraw back to Federation space, but the damage is done. Gariushi is killed -- and a million to one cloning accident results in his permanent death, which Ishukone Watch has no choice but to tell the company's leadership that it seems like it must have been sabotage (which it was...or was it? No one really knows -- keeping it ambiguous makes for a more interesting story in my eyes).
Now the Caldari have what looks like a clear act of premeditated aggression -- they intended to murder Gariushi all along and use the conference as a means to launch an assault on the State, because as soon as the Federation retreats back across the border the Gallente starts going on high alert EVERYWHERE. The Patriots are quick to believe this, with Heth at their head, and the LIberals seem pretty willing to buy into it as well -- their leader was just murdered in cold blood and everything they have points to it being a direct assault on them. The Practicals may try to be the voice of reason, but even they aren't likely to push too hard.
On the Gallente side, they also are sitting on what looks like a trap -- and their intelligence service finds information that makes it look like Gariushi's death might not have been an accident. They know THEY didn't sabotage Gariushi's cloning vat, and maybe there's evidence from some of the battle footage that some of the strikes on his flagship were done by Caldari vessels (not particularly surprise in a massive, confused furball). Of course, if they try to tell the Caldari -- even Ishukone -- that they weren't involved, they aren't likely to find a lot of believers, especially right now. So they gear up for war, assuming that the worst of the Patriots have seized control -- coincidentally, only making Heth look even more right about the Gallente planning all this.
Tensions continue to escalate, and the situation worsens on Caldari Prime -- now the Federation is considering measures like internment camps not only to contain the Caldari population but also to protect them, as Gallente on the planet start to call for their expulsion. Of course, this is only more provocation in Caldari eyes, and the Caldari become convinced that war is inevitable. CONCORD is flailing its arms to try and defuse things, but no one is listening -- especially since the Amarr and Minmatar are in a similar situation. The Caldari become convinced that a single decisive strike against the heart of the Federation may be their only hope in the face of a much larger Gallente military with a much stronger economy at the moment.
Meanwhile, things are melting down between the Minmatar and the Amarr, and the Gallente are getting nervous there too -- the Amarr are a much bigger threat than the Caldari (they have a larger military and one designed for power projection). They start shifting forces towards the Amarr/Minmatar front, and the Caldari see an opportunity to end the whole thing and the extreme Patriots see a chance to get what they've always wanted. As war breaks out on the Minmatar/Amarr front, the Caldari punch through weakened Gallente lines with everything they can muster, after launching a massive sabotage operation against the Gallente command and control networks (something like what the Russians do prior to the launch of their invasion of Western Europe in Red Storm Rising). A feint into a far-off part of the Federation -- say Tierijev or somewhere in Placid -- draws off the Gallente forces, who can only put together part of the picture, and then the main fleet punches through Algogille and into Luminaire. The shit is hitting the fan all over -- the Gallente are panicking because the Minmatar front is suddenly going mad at the same time, and the Home Fleet is preparing for an invasion of Gallente Prime, and the bulk of their forces are defending against an invasion somewhere else entirely. While Caldari forces start to secure Caldari Prime, the Gallente forces in Tierijev are starting to push, rolling through poorly-defended lowsec systems towards the heart of Caldari space.
You'd probably have to adjust some other stuff, but in general I think that's a much stronger storyline, and what's better is it eliminates a lot of the problems I had with the original storyline. Neither side is portrayed as incompetent or particularly evil -- the war breaks out because of bad blood, poor communication, and itchy trigger fingers. Reasonable Gallente and Caldari can both feel like the other side was to blame and get behind their leaders, something that was sadly lacking in the original storyline, which made the Gallente look like idiots and the Caldari look like warmongering bastards. The Broker isn't some shapeshifting superman, he's the shadowy moneyman behind the scenes, tweaking a knob here or there to keep both sides running towards a war that will pour money into his pockets. Tibus Heth is not some populist demagogue, shooting from factory worker to megacorporate CEO in the space of a month -- he's someone who was already in the corporate power structure, and who used circumstances to his benefit to seize control, and simply became the face for the strongest political bloc. There's no CPD brownshirts, no Heth going in with the invasion (because seriously...what?), and pretty much all the major plot points of TEA still happen, just in slightly different ways.
You could easily have written something similar for the Minmatar/Amarr that didn't involve the Gallente evidently missing the fact that the massive foreign aid package they gave the Minmatar was going towards a secret warfleet, or magical Elders, or Karin Midular being an incompetent fool. That's what was so galling to me about TEA -- all the pieces could have happened in a much more realistic way, and one which encouraged the very themes that had been running since the game started and had been promoted by the various RP groups of each of the empires, but....it seemed like that was discarded for no reason, throwing away an opportunity to really get some free marketing for the storyline.
