Never really understood why a Leader takes a loyalty hit when assigned to govern a planet.  I also expected it to increase, rather than decrease their loyalty.

I hard-support the idea of leaders taking a loyalty hit when they have to govern. In my country, the UK, it seems like it is the titles and influential positions (in factions, cabinet ministers, etc) which are coveted, but the last thing somebody in the government wants to do is actually govern, because that would be hard work.

Perhaps it is the word "Leaders" that makes this feel iffy for people. I certainly don't know anybody who would describe most of these people as "leaders" in real life. More like "influencers", "elites", "manipulators", or simply "politicians". I understand why the game will obviously retain the use of the word "Leaders", because it is a game and that obviously feels right, but yeah, substitute any of those other words and suddenly an unhappy governor makes much more sense.

As for the real meat of this topic, I do agree Loyalty feels unfinished, but only because I'm excited to see more. I already enjoy trying to build up a Harmony Crystal economy (be it gathering or trading/purchasing them), and gradually boosting everybody's loyalty to a point where the "Extort Governors" EC doesn't feel too risky, but I'd like to be doing it for more reasons than this EC alone. (Again, Extort Governors feels VERY much like Stardock are trying to evoke a feeling of a bunch of rat-like or baboon-like characters all fighting for influence/power, rather than actual "leaders" with their Leader system, and it's just named that way for simplicity. Hey, what if they just named it "Characters"?).

I want there to be more reasons to buff up the loyalty of my ministers, diplomats and faction characters, so I hope an expansion comes along soon which fleshes all that out.

It would make better sense if governors' loyalty was dependent on the distance to the capital world. I would even throw in the number of colonies that send resources to the governed world if it's really distant. This could be mitigated by spending control for that particular planetary region. You could even give a boost to civs that are totalitarian, collective, and such. Just my thoughts.

Governing parts of an island already governed by someone else might not be a great comparison. Despite the same name, they aren't the same role.

We'd expect the leader of a planet to have a much larger degree of autonomy. It'd be closer to a feudal lord where the governor has complete autonomy over how their planet is run and is expected to provide taxes and production to the empire as a whole. It doesn't have to be this way, but given core planets can't even exist without their own governor, and given how transit times would make a more centralized governance impossible outside of a few special races, I feel comfortable saying the governors enjoy a position of great power and freedom.

While a cabinet member may have the attention of the faction leader, they are just a bloke on the payroll with little power of their own. While the governor of a core planet has enough power between their planets resources and local armed forces to demand a faction leaders respect and care. They could (and should) be able to just declare their independence if they aren't loyal and feel they have enough power. They could even attempt to seize the capital for themselves.