Now I think this is an interesting RP question for you all. At a later date I hope that my character will build his fortress and city (I'm guessing slightly larger than Whiterun) in Falkreath Hold, and with the permission of the Jarl of Falkreath, build a large fortified wall that will roughly follow the boundary of the hold, all with the strict understanding that it and Chadric's forces will be used partly to protect the town of Falkreath, of course. The Jarl will remain head of Falkreath, but Chadric will become the muscle. This will be Chadric's first major step to taking on the Thalmor.

My question is, what of the little town of Riverwood, which sits just outside Falkreath Hold? The guards of Whiterun themselves keep saying how vulnerable it is. Being the good guy that he is, Chadric would ideally include Riverwood inside his large defended wall, but he wouldn't want to step on any toes in Whiterun by doing so. A bit of a dilemma, isn't it? My guess is that the only way around it, like real life politics, is a matter of give and take. There's some parts of Falkreath Hold that I don't see worth keeping hold of, like the http://images2.wikia.nocookie.net/__cb20111121211648/elderscrolls/images/c/c6/FalkreathHold.jpg south-west of Whiterun. Much better to fortify the passes through the mountains into Falkreath Hold proper than to keep hold this section.

RP thoughts, anyone?

You could always throw money at RIverwood so they can build their own wall separate from your wall.

Does that crossroads area you're talking about have anything worth of value? It doesn't seem to have a river, so they can't replace the mill they'd be losing by handing over Riverwood. Unless you sponsored the building of a new town in that area which could supply some kind of natural resource for Whiterun Hold, or take Riverwood under your protection and provide Whiterun with even more lumber...I dunno. Quite the dilemma.

From what I can remember the crossroads is just open land. But there is something I didn't mention, the next phase after fortifying Falkreath. This would be to build a garrison at Whiterun, a garrison that would be under dual control of the Companions and Lydia, but mostly Lydia seeing that she's his official representative in Whiterun and tribune (ie colonel) of the future garrison.

(heh, heh, what makes me think I'm not going to be in the good books of either the Empire or the Thalmor?!)