Instead of just them just being gray "3"s on the board, they should have more capabilities. I think you should be able to deploy your armies on neutral territories as an irritant to an enemy taking a country. You wouldn't be able to attack with them, but it will raise the importance of neutral armies. This will also increase the strategy needed when dealing with neutral armies.
i love he idea because then when someone is trying to take over a countryr and there is that one pesky neutral you could just deploy it there instead of making a nice big path of blue 1's