This is the process for which wars of conquest would take place under this proposal.
1. Declaration of war
To declare war a ruler simply passes a law declaring war on the jurisdiction they intend on invading. Declaring war gives them immunity from spirit loss punishment for breaking the laws. Basically its war time and thus civil laws of the place they invade do not effect them unless they stay in the territory after surrendering.
2. Battle
Battle would be simple, the area that has just been declared a war zone is recognized because all the people fighting in armor have the flag of what ever place they are fighting for on their armor.
In battle if you die you would stay in Ghost form until the battle ended, allowing you to see the fighters but them not being able to see you. This means that the population will decrease during the war, allowing for swift strategic action to take place and prevent long drawn out stalemate from people coming back and fighting after dying.
3. Penalty of death
I would suggest having the penalty of death be a reduction of 28 days for dying in war as the aggressor and regular for the defenders. To make high risk, high reward situations that would put the leaders in a strain if they failed to win decisively.
4. Purgatory
Purgatory would be the state that a player who has died in war would stay in until the war ends or the municipality surrenders. They would be ghosts who could see everyone and everything but not interact with non ghosts. The living can not see them however as to not interfere with the battles.
5. How to end a war
Surrender- which is achieved then the ruler lowered their flag and formally passes an ordinance or surrender
Capture the flag- Taking the capital and raising your flag. Once your flag is raised you win the war ends
Total death- Everyone is sent to purgatory on one side and no one is left to fight.
Total Mutiny- The fighters on one side deciding to join the other side or all individually surrender.
In full I think this would allow for the fun strategy of war we all love without it getting drawn out, and making it a huge stakes for invaders but huge rewards for a well fought battle and gives individual fighters a choice to fight to give up and accept defeat. Also internal politics of failing to successfully take the place you send people to war for.