Well, it could add some interesting flavor to the endgame, but if you’re down to two territories, then you’re not purchasing much of anything anyway, so there won’t be much tactical difference.
One of the strongest two-territory combinations is Moscow + Caucasus, which are often worth about 12 IPCs. So, instead of 4 regular infantry, you buy 6 citizen-soldiers…but they’ll defend roughly as well. 6 hit points and 6 defensive pips vs. 4 hit points and 8 defensive pips? It’s kind of a wash.
Even if you get the design of the citizen-soldier unit right, having the rule kick in when you’re down to only a couple of territories doesn’t quite satisfy the itch I’ve got, which is to punish countries that repeatedly over-produce infantry. The idea is that if you pour out the blood of your armies like water, well, then, eventually you run out of blood! But with the two-territory rule, you could build nothing but tanks and fighters the whole game, symbolizing your anxious concern to avoid risking any more lives than you absolutely have to – and then still wind up “running out” of infantry in the endgame when your enemies push you back to your capital.
There’s nothing wrong with designing custom units, and in fact I think your citizen-soldier unit is quite well-balanced, but I don’t think the “manpower tracking” problem can be solved with any kind or kinds of custom units. It’s just not that sort of problem.