Found the answear in the Cmments thread.

Just so everyone who does check here for an answer gets ones -

Its for both gameplay and technical reasons. The gameplay side is that they have huge building slots and overpowered provinces that don't really fit with the other factions. The technical side is that making them conquerable and having the other regions work properly with buildings is problematic. I can probably do it but it would be a bit of a mess in the end.

So will you be adding the wood elves to be conquered? Or will it be too problomatic?

this SUCKS
it means as the Empire I can never destroy the Elves (enemy of my ally)

would be nice if we could at least RAZE those forests.

Originally posted by Galactic Origins:

would be nice if we could at least RAZE those forests.

You can. That works in the base game.

Originally posted by Dresden:

Just so everyone who does check here for an answer gets ones -

Its for both gameplay and technical reasons. The gameplay side is that they have huge building slots and overpowered provinces that don't really fit with the other factions. The technical side is that making them conquerable and having the other regions work properly with buildings is problematic. I can probably do it but it would be a bit of a mess in the end.

well once the last DLC/FLC is released you could try i guess would be nice to be able to conquer athel loren

Dresden: I've got some issue and I think that's a bug; I understand that Aethel Loren cant be conquerable. But in my campain (i play with the Empire) the elves developed a bit before i crashed them and now after-elf ruins also are unable to rebuilld. It can be conquered but can't be rebuilt. This looks like on village screen there is "ruined asraia something" [dont know english name, that's just an elven ruin] and I've got an info that to build my village I need first destory the elven ruin but i have no such option...

Lore-speaking It would not be out of the question for humans to settle in ruined elven cities, that is basically all bretonnia's major cities. From the mechanical stand-point there are mods out there that let you have 10 build slots in your main city just like the elves anyway, but you could limit it by putting in some pre-built structures like ruins that upgrade to nothing and provide no bonues. Also add in a local-populace modifier that makes elven or dryade rebellions occure unless you have a good army stationed there.