Khazharkhan has instituted a sort of homestead system. Anyone who swears the takes the citizen oath may claim a homestead. This is a plot of farmland of several dozen acres, which is enough to grow enough food to feed a family and to have enough to sell at market. After a homestead is claimed, a citizen has five years to "improve" the property -- basically they need to have built a permanent structure (such as a house) and till and plow the soil. Once they've improved it, then the title to the property officially passes to them.
Khazharkhan would prefer to just give people the land, but he knows Arrant doesn't approve of that. So this system exists so that he can tell Arrant, "Oh, of course we're not just *giving* people land; they have to do something with it." (I fully expect Arrant to get suspicious when he takes a closer look, though. That will be a fun scene. :)
Once we get a bit more cash, Khazharkhan plans on setting up banks to offer capital loans to our skilled craftsmen, so that they can buy equipment to set up shops. (This is the craft equivalent of a homestead act.)
Any spirit that wishes its worship to be legal in the province must register itself at the Manse. At that point, it can legally solicit prayers and offer blessings, but it may not establish any shrines, accept any offerings, receive any oaths, empower any priests, or cast any curses upon any citizen for any reason. Furthermore, 25% of the Essence it receives from worship must be paid to the government (ie, the PCs). This may be in kind, such as charms worked on behalf of the PCs or in pure Essence.
In order to do these things, it has to swear an oath (which must be witnessed by Arrant Greenjay) that it will obey the laws of the province. At that point, it's now a citizen god, and can establish shrines, have a priesthood, and accept sacrifices from the citizens. All sacrifices have to be themselves legal: it's okay to accept sacrifices of chickens, but not of virgins or of stolen goods. Any oaths it accepts from a worshipper have to be legal commercial contracts -- an oath is deemed invalid if any clause of it would be an invalid contract. Also, having sworn the oath, the tax rate drops to 10%.
Furthermore, any curses it wishes to cast must be approved in advance by the government. Khazharkhan does not want gods setting up protection rackets, and is completely willing to kill any gods or elementals that do so. In fact, he's kind of HOPING one does, so that he can try feeding it to Glides-with-Hope and seeing if it improves her health.
It's worth noting that these rules are intended to make the province more attractive to small gods than powerful ones. The celestial bureaucracy is badly decayed in the Threshold, and powerful gods can basically do whatever they want to lesser ones. Khazharkhan figures that by making the province attractive to the little gods we can attract a bunch of gods who want our protection. Then, by subjecting these gods to competition and market forces, the human population can get blessings more cheaply than elsewhere, which makes our land more attractive to humans, as well. And finally, the Celestial Bureacracy around here will have ended up swearing loyalty to us.
Also, he's trying to bind the elemental courts to us with honey rather than the stick: giving them the right to establish shrines is not a right they officially have (I think), and they can get it if they become citizens.
Khazharkhan permits humans to worship any god they want, as long as their worship practices are themselves legal. If they worship a registered or citizen god, they have legal rights in their worship. If they make an offering and fail to get service, then they can bring a civil suit against a god. If they are unjustly cursed, they can file a criminal complaint against it. Of the false religions, the only one he cares much about is the Illuminated Cult. Since it venerates the Solar exalted, naturally he despises it. All of their worship services (especially the ones that treat the Manse as a temple) have heavy "fees" associated with them. His goal is to leave Illuminated pilgrims destitute and give them nothing in return, so that they drop their foolish belief in the divinity of the Solars.
At the present moment, enforcement of these regulations basically boils down to the PCs. There are currently few enough people and gods that this should work. However, in the long run, enforcement will end up in the hands of our underlings. For this, it seems like Takuro's kung-fu priest-cops must figure heavily in it. Likewise, Khazharkhan hasn't written any regulations about the official state religion, since he figures Takuro will want to be heavily involved in this.