Oh boy good thing I checked this thread. I started my game with 31 towns, and I thought the game had a 2 settlement limit, not a 26 total town limit upon deciding whether to offer the Alderman mission or not. Once I become Alderman and decide I want to create settlements, I'll do as you showed and I'll probably put the limit on 35, so the other 5 locations can stay as independent pirate nests with no further issues. Thanks for sharing this.
And was there any luck on finding a way to modify through cheat engine so the settlements offer productions correctly without having to force unnecessary shortages of the wrong products?