i've seen a few fantasies with the mid east culture as a base, not necessarily modern issues put in a fantasy setting. more the interplay between tribes and how they consider women, that kind of thing. there wasn't even a disguise involved which was a bit off-putting.
that's what i don't like about alternate worlds, the idea that humans put in the same environment will also, say, degrade women based on their religion, as if there's no other possible outcome, or that the desert people in another world would also adapt identical clothing colours and patterns. castles i can buy into because, well, that seems a natural conclusion to me.
your environment can dictate cultural nuances which in turn suggests your religious, economic and government bases. for example, if your enviroment dictates a tribal setting, you probably won't have a represenative democracy. this *doesn't* mean you trade women for whiskey or camels.
in your story, you mentioned on the other thread a pervasive bleakness. we know there's a town, so it's a permanent place. we're then lead to believe this is typical of how people in the country live. you want a king, so you'll have a monarchy set-up. not sure if it's feudal or not, but you need to decide that, because your king could be beholden to the emperor (the king being the emperor's vassal, a lord vassal to the king, a fief holder vassal to a lord). this in itself can suggest a lot of avenues.
given the bleakness you're aiming for, that suggests to me an economically depressed town. not sure how far this idea extends, if it's just that one place or indicative of the country as a whole. again, a country in a depression can open up a lot of particular storylines.
since you're wanting some ideas, you'll have to tell us what kind of situation and characters are involved for starters, i think. i can tell you what i think is cool, but that's not to say that's good entertainment or right for your story. besides, i'm in a philosophical mood today, so off the top of my head i'd say the witch isn't capable of helping or isn't in town (or burned at the stake given the new decree by the king... i just think the remnants of the old crone chained to the charred post is a cool image). hop onto a caravan going towards the king's castle, and that part of the story involves the spiritual growth of that character as he travels and learns, which again suggests a base character to start with (given the bleakness of the surroundings, i'd probably go with an equally dismal-feeling character, one who learns the value of life along the way).
the king and his court, whoever they may be, will (philosophically) represent various aspects of life (paralled by the traveller, each section posing questions the opposite side answers, taking turns back and forth). it wouldn't necessarily be about overt intrigue, rather intriguing questions along the lines of the necessity of violence at times or the pitfalls of justice, a man's weakness in face of a woman's wiles or the cost of money against a man's soul (to mean what a man will do to survive, what he'll do against his nature to survive).
sounds boring and dialogue heavy, huh? not at all. it's a thinker, though.
or the princess is preggers, but who's the daddy? prince biff says it's not his, but will he defend his argument by going to war if he has to? what will prince biff do once the king has to save face by wiping out one of biff's border towns? and is the priestly advisor to both kingdoms playing them for some insidious purpose? or is he the father? these answers and more in the next exciting installment of 'who's your daddy?'