Honestly mate, I really don’t know what any of your points are.  You’re literally just rambling about stuff now, a lot if it based on assumptions about my opinions on things that I haven’t actually divulged.

There’s a sort of sliding scale within the Warhammer world between magic and technology.  On the one hand you have Elves and Lizardmen who have almost no advances technology at all but who command vast and powerful magic.  Magic IS their technology and does all the heavy lifting for them.  On the other hand you have the Dwarfs who have no practical magic at all beyond carving runes and sigils into things.  Instead they have incredibly advanced engineering skills (compared to the rest of the world).  In the middle you have the Empire, they have some wizards and they have some technology but do not have the best of either.  Then you have Bretonnia who have neither powerful magic nor great engineering.  They have, well, very little really.  They don’t really fit with the design rules of the Warhammer world.  Albion wouldn’t really fit with the design rules of the world either because it was always described that the Elves taught magic to humans and only taught them a little bit.  So you can’t really make Albion a super high magic faction.  It’s already described being a primitive backwater so you can’t make them technologically advanced either and so you probably end up with yet another Bretonnia.  Also, if you did them as an ancient Celtic themed faction, you are kind of just duplicating wood elves.  So I am not saying you couldn’t write Albion as a faction – which is quite obviously what you think they should have done – only that Albion comes with restrictions and challenges that Cathay doesn’t.

It feels more and more like this isn’t really about whether it makes sense and whether or not YOU like it.  It pretty much all “makes sense”, what it really boils down to is whether you personally like it or not.  And in the case of Cathay, it seems the answer is no, you do not.