Hostile Actions Setting

I rather feel this is idiot proof as it would need to be engaged...

However, as for betraying an alliance: this can be done regardless of the proposed game mechanic.  And if someone is planning on turning on their own alliance, they can pretty much count on being kicked out.  So how is this different from infiltrating to learn potential weaknesses and then dropping the alliance to attack them?  (0.o)

Furthermore, if they are going to the effort to meta-game an alliance, it would be far more practical to have another (alternate) account attack them and not blow their cover.

No, the only thing this would do is open up one alliance to the attacks of a member in another alliance that is confederated.  

e.g. what if someone has set up a siege on your neighbor and your neighbor asks you for help with lifting the siege.  (lets add the wrinkle and say the two of you are friends in real life - though not probable, it is possible.)  You would like to attack the siege that landed from X alliance, but X alliance is confederated with you and your army would bounce off.  The options are to allow this player to be sieged or to drop your alliance long enough to go attack them and then hope your alliance will take you back.  This proposed game feature would unlock this by allowing your army to ignore the rules of engagement and then let the alliance leadership decide afterwards if the decision was correct or not.  The peace of camp was set up to help defend one another from attacks...not to take away common sense.  Common sense says you should defend your friend even if the opposing force is from another confederated alliance.  Lets look at the worst case scenario: The leadership in your alliance feels you acted rashly and kicks you - but if you were willing to risk being kicked with this potential game feature, then you would have also dropped the alliance to carry out the attack and then asked for re-entry later.

Now contemplate the advantages this will have in the long run.  I once sent a siege to the far corners of the map, only to locate a closer town I would rather take.  I asked to have that siege destroyed, but the only close player was confederated.  Likewise, when I sent settlers to a location I wasn't terribly pleased with, I asked to have the city razed.  Again, the closest players were confederated.  These confederations provide more red-tape than anything.  Thank goodness they are removed for game hosted tournaments, but still problematic for private hosted tournaments...