After looking through the files, I think the problem may be related to allowing "non-follow" naval fleets. In an effort to represent that navies wouldn't allows chase pirates, someone gave the merchant or trade attribute to naval fleets. This may explain the sailho command. It may also explain 16 1st rates and frigates being described as a "rag tag." If that's rag tag, what's a squadron; a fleet?
Another solution, and I remember discussing this at great length with Nathan Kell, was to create an extensive and intricitate (and likewise extremely difficult to code) dynamic archipelago system. The idea was premised on the notion that whether trade ships reached their destination should have an impact on that game... likewise, prices would be reflective of the island's supply. This dynamic economy would then impact shipyards; you need supplies to build ships. Naval vessels would be dependent on other factors, but the idea was that they would be limited. If the player sunk a frigate, then that nation just lost a frigate, which means that frigate can't escort convoys, which means fewer convoys will get through, which means the demand will skyrocket for goods, and the islands may lose population, or be captured by the player or ai. Vessels that surrender could later show up in the service of the capturing nation. The best part would be that these events might be connected to the player's conversations with NPC's so that keeping track of rumors would be important.
The next phase would be to create dynamic characters which can be found, at times, in their home port or elsewhere and conversed with. These characters could then get better through their experiences and exploits. They would "remember" their interactions with the player (whether he treated them well after capture, etc). Likewise, perhaps certain privateers or naval captains might be hired or ordered to chase the player or other pirates down. Perhaps watch as the naval officers in your town move up in rank or ship class. This also means that you could spend months running or chasing the same ship all across the Archipelago, asking at the taverns for news since your last visit. The bartender would then recount who has recently visited the island and to which island they sailed to. The accuracy of these rumors would be dependent on the player's luck but mostly the player and target characters' reputation and renown. Afterall, not every pirate or ship is noticed or remembered. Likewise, if the player develops a reputation, it is more likely that privateers or pirates or enemy nations might be out to get him.
Finally, the last element would be an interface screen in which the player could view the top 10 captains for each nation and for the pirates (and of course, whether he was one).
Of course, --- and this is a huge of course --- this would be an amazing complex system. It could certainly not be coded at once, because it is too large. It would have to be created in smaller and more manageable phases (as most projects are). I understand that Sid Meier's Pirates has a similar system, but I'm not familiar with it. But the point is that there is precedent for such a dynamic system which not only makes the game unlimited in terms of replayability, but helps the player develop his character and watch the real world function around him. Sometimes the player would help shape events, sometimes just watch as larger events unfold around him.
That's the dream. Whether it will happen though, is up to us.
Its a shame NK isn't around anymore...