The bandit village does help get to the 2nd city, but after that, it takes the equivalent of 5 Victory Processions to build up the farm villages to max to get the resources need to build and expand.
Comparing the old villages to the new, there are a couple advantages, and lots of disadvantages.
With the old villages, you were limited by now fast you could research the required units, and then how fast they could be built. This sometimes required additional construction to get the research points, and the barracks up high enough. And of course you always ended up with a few extra units that you might not have wanted.
However, you also inherited any build up that had been done by others. So if you were on a full blue island, you could still easily get access to all of the villages, and the associated resources. And it was often a team effort to get the villages maxed out, for everyone's benefit. Also, alliance mates could provide resources to help you build up the units needed, or various island quests and nightly bonuses provided many of the required units.
With the new villages, you don't have the pesky extra research and orphan units. But if you end up away from the front lines, accumulating the BP required can be slow and painful. This is made worse with the recent change to only give fractional BP to alliance units (generally a good change, but this is a down side of the change).
Additionally, there is no other mechanism to get the BP required, other than battle.
While this is a war game, there is also the need/desire to increase (or at least maintain) the player population. This change has definitely put a damper on early growth of players, which will lead to frustration by new players, and reduced retention. The change from 8 to 6 villages, and the loyalty bonus are fine, but really have nothing to do with BP vs conquest of the villages.
A couple possible changes that would make these a little better would be to retain the villages a city has when it's conquered (maybe require reconquest due to change in ownership) - this would be similar to the old villages retaining their level, and just needing control reasserted. Also, allowing a different mechanism for conquest, maybe resource/attack related, similar to the old villages, would make it easier for smaller players to grow. The resource/attack size could scale with player size so that at some point, using BP might be cheaper. This would be similar to the scaled attack morale that's in place.