Weel, kinda long way around, but this story will get to the gnome eventually.
One of the player's in my homebrew world had a monk who had to fight to gain a level (1eAD&D); he won and gained control of a town. Due to the odd political structure the new leader was a citizen of the kingdom of Akkad and the town switched allegience to that country. The monk granted a cleric PC of the same church (The Temple of Our Lady of the One True Way) a writ to build a temple and control the religious life of his demense. They also had a treaty to support and defend each other. That monk also gave out a couple of writs to some other PCs, including a gnome he played.
The monk then proceeded to get himself killed. The LG cleric, played by another player, gave the monk a nice funeral instead of getting him raised. That cleric then took his writ and declared that he was taking over the political control of the town under some aspect of the treaty. No one else cared or had any claim better than that so it went through.
This annoyed the player of the deceased monk and he pushed to make sure his gnome maintained his legal rights under the new government. The gnome took a weird alignment shift toward Chaos and turned his ordinary shop into a, ... sigh, sex shop.
The gnome had a wand created, using Shocking Grasp but in a wooden wand to and limited to touch so that he could create a vibrating stick. This prompted the cleric to begin 'urban revewal' and he rebuilt all the buildings surrounding the gnome's shop so that it was in the center of a series of alleyeways, cut off from polite society. This meant that the gnome became a focus for those of an unsavory nature to seek out when in that town.
When I roleplay that character I describe the shop in the sleaziest of terms and the gnome reacts to gold coins the way Gollum does to the ring. It is fun to chew scenery like that.
(edit to add this...)
In my homebrew, the gnomish nation is a fully paticipatory democracy since I thought that would be the most likely to be a raucous and chaotic type of government. the major cities were named Ravensberg, Ravensburg, Ravensbourg, Ravensbarg, etc. I thought it made the map rather interesting and it was fun for the PCs to ask for directions.

One New Year's day I ran an adventure for my group where they all played gnomes defending their town from an attack by Emirikol the Chaotic of 1eDMG illo fame. I had him an evil bard seeking Pipes of the Sewers from the local museum. It was a lot of fun, since Emirikol used Darkenbeast spell (changed ordinary animals into flying nasties). None of my players had ever noticed that spell in the (Fiend folio?) so it went over well.