This may be realistic, but it very often is a miserable experience. The advantages for the winner tend to snowball into more advantages and more one-sided victories, meaning the campaign is over in all but name and the rest of the games are just slogging through the inevitable to make it official. Or, more likely, the player on the wrong end of the early loss doesn't bother showing up anymore and leaves you with a hole in your campaign.
What do you think I should add or take out?
Take out the entire system. Just assume that all sides have sufficient "off camera" reserves to field a standard-size army and play normal games with appropriate fluff and mission objectives.