I personally think this mechanic is excessively complicated. If I didn't plan on commenting, I would've skimmed through the wall of text and probably miss an important detail.
That being said, I agree with Ronny. Despite the numerous clauses, this seems like a band-aid fix to me. As the loosing side of this war I think you've underestimated the problems surrounding the spy mechanics. Spy-op is technically non-existent for me since they've already been massacred on day one. I suggest that you reduce spy vs spy casualty by +/- 50%, disable espionage to beige'd nation (there's been at least 3 nations trying to assassinate my "spies"), increase spy damage (maybe proportional to city count?), increase spy enlistment to 3, and 4 with IA.