Here I am not reading up on the forums for a while, and almost missing this thread! Glad to know you are getting use out of Erillion. Tooting my own horn a bit, it may be a good place for RPG newbies. It is inspired by The Word of Chaos, the quintessential Hungarian adventure fantasy novel, which was in turn heavily inspired by The Sinister Secret of Saltmarsh and The Secret of Bone Hill.
1) Mage Tower does not really threaten Baklin: neither are strong enough to challenge the other, nor do they have the motivation to do so. Baklin is a marine power interested in staying a hub of trade (and Tol Tazeloth is a small sea fortress on a formidably well-defended island); Mage Tower is a stronghold of high-level magic-users with arcane interests, and they are more inward-looking. They are "speaking past each other" because they speak different languages of power. Their goblin servants harrass the trade routes, but this is mostly brigandry, and easy to overlook. Meanwhile, Slarkeron and other magic-users are as useful to Baklin as a merchant city's connections to Mage Tower and its masters. It is a relationship built on distant coexistence, not existential rivalry.
1b) (At least in my campaign), the true danger to Baklin is found in the orcs of Tol Grannek: brutal, industrious and well-organised, they are learning to project power and establish smaller, less noticeable bases over the land. They can increasingly raise land forces, which Baklin lacks. The orcs are not strong enough yet, but in a decade or so, they will be.
2) These materials were published as zine articles, and later collected into the volumes on the product list. Broken Wastes was in Fight On! (Stone Gullet, The Tower of Birds, I Thirst, and an article on caravans). We first used these materials in a 2005 Wilderlands campaign! Molonei, an underground lost city with weird hedonists and an amoeboid demi-god was published in Knockspell, in the Isles on an Emerald Sea series. I plan to republish both of these collections with updates and expansions; Isles may come out this Autumn.
3) City Encounters is Matt's supplement, but edited to 300 instead of 600 entries. His booklet is comprehensive; the edited version was supplemental to a set of baseline tables (which are found in The Nocturnal Table), so I removed a lot of general "guards" and "brigands" encounters, and focused on the more detailed stuff.