I think he does realise that Dixing at the moment really sucks and that the treaty isn't exactly fair. I'm not sure why he doesn't try harder to change the situation in Dixing, but I don't think he needs to be told that it's not good.

Yeah, he obviously knows it's bad.

I think he's doing what he can by being as lenient as he can, and arguing with the Regent as much as he can - but he's not getting any traction for making genuine changes. What is he supposed to do? You can't impose a revolution from above. All he'd be doing would be to essentially appoint himself dictator ...