Diplomacy can be made much more robust. this is a change that should be much less of a task on the development side than some other changes that are needed (since there is already existing code infrastructure that can just be built on in this area). The things I think need to be added are:
1. Allow diplomatic interaction with AIs. Right now there is next to no ability to interact diplomatically with AIs, but there should be. This would be an easy change. One major issue is that if you are at war with an AI (or with a player who turns AI), you basically have no way to end the war without killing them completely which isn't always beneficial.
2. Allow more than one trade at a time. This could be offering payment, provinces, and more in exchange for other things. Rather than having to create a series of trades, you can include it all in one trade offer.
3. Allow vassalization. Doing this could allow for newer players to gain experience without being immediately bulldozed by other players. It could provide the overlord with at least partial victory points for "owning" the provinces of the vassal as well as parts of the vassal's tax and resource production. On the flip side the vassal could gain the benefit that anyone who declares war on them automatically declares war on the overlord, they could be awarded a smaller portion of the victory pot if their overlord wins. Perhaps they could also get some economic boosts or build speed boosts based on the development level of the overlord. The vassal might also need to lose the right to perform certain diplomatic actions (like declaring war). Vassals could also count towards the limit of coalition membership to avoid artificially bypassing the member limit for coalitions.
4. Allow players to grant control of particular armies to their allies. This could definitely open the door to plenty of exploits, but it can also make alliances more valuable and provide an obvious value to those who are trustworthy allies.
5. Allow for recurring trades. This could mainly be a way to create a system for paying tribute. It should allow players to set a number of times that a particular item in a trade would occur.
6. Trade Agreement. Create a trade agreement ability. This would require you to open trade with each nation in order to be able to trade with them. In addition to allowing specific resource trades on the stock market between you and that player, having open trade would also give your economy a boost by providing additional income from trade which is relative to the economy size and/or population size of the other nation. That is: the bigger your economy, the bigger the boost other people get from having an open trade agreement with you (and vice-versa).
7. Remove territory trade limit. In order to discourage large-scale territory transfers, you could add in a nationwide morale penalty for giving away territory.