Havent read city state, so I don't know what the split is on 80,000-20,000 able bodied.
20,000 would qualify as a large city. Throneport is a small city. You can of course choose to double the population since the war ended. As a "free city" is probably a good choice for bitter veterans.
As for the level thing.. Eberron NPCs being 6th level and under is a myth thats been circulating for some time, and I'm not sure from where. The official Eberron Demographics Dragonshard tells you how to alter the DMG charts to find out NPC levels.
An Eberron small city is a +4 modifier instead of a +6 (roll twice). Which means on average, a small city can have an 7th level rogue, 7th level fighter, 5th level cleric, 5th level wizard, 11th level warrior, 11th level adept, 11th level magewright, 11th level expert, 9th level aristocrat and a 14th level commoners
as opposed to
a non-Eberron small city which on average has TWO of each with these level difference. 10th level fighter and rogue, 9th level cleric, 8th level wizard, 11th level warrior, 9th level adept, 13th level expert, 8th level aristocrat and 16th level commoner.
Also, Eberron takes into account the higher-level wizards in Aundair, the higher level fighters in Karnnath, etc.
As you can see, the highest levels of the classes arent that different (regular d&d NPCs are 2-4 levels higher in small cities, up to 6 levels higher in a metropolis.).To offset this a little, Eberron has NPCs with NPC classes of higher levels.
The main difference is the AMOUNT of high level characters. As the regular d&d charts provide double the number of NPCs with class that Eberron does.
So far, the Eberron books have NOT violated this as much as people think they have. The 10th-12th level NPCs with PC classes in the books are perfectly acceptable.
The problem only comes if the number of these NPCs continues to grow at some ridiculous pace. In official Eberron products, it likely won't. In personal campaigns, the DM just needs to account for the named NPCs ...if he plans to use them.
But the important people in town are STILL going to be mid-level, so if any module you run uses the DMG charts for finding out levels, only the highest level characters will be too powerful for Eberron (As you can always assume that you rolled a 6 instead of the average 3 when finding highest level)
If city state has so many statted PCs to overflow the system, even if you change some from fighter to warriors and rogues to experts, that could be a slight problem, only if the DM was going to use every single NPC in the book.
