Specifically talking about Ragusa for the Ottomans, but other MRs could be useful too in other parts of the world: Lubeck for BBurg, Genoa for France, OPM Venice for Austria, etc.

I'm thinking that the modifier you get for goods produced by giving the MR a province in each node you care about (for a trading post) would give you more of a boost compared to just owning it yourself. I'm not sure how feasible this is though, but maybe someone else has had this idea before and tested it.

Obviously you couldn't feed it to be larger than 20 provinces, but that should be plenty for all but the largest blobs.

Would a vassalized Merchant Republic still create a trade league, and if so, is this a good thing or would it hurt me more than help me?

What are your thoughts, /r/eu4?