Ah, I found it. "Special" on the top right in the default scenario at the map selection screen. Skipped right over it. Played like 5 different save files and never noticed, lmao.
Hmm, not exactly what I had in mind, I was hoping they functioned more like they do as AI with all their starting bonuses and such. Outsiders having research stuff right off the bat and such. It seems like most the Special Factions function like normal factions in this mode. Still cool for roleplay I suppose. I'm glad you can't recruit like normal in this mode, though you can still hire people from events. I guess you could consider that manipulation.
Edit: Ohh, random end turn events still happen if you capture/hire any new characters, neat. You can't control who they target but I guess fair enough. Whoops, tentacle births from magic use will kill pregnancies from the tentacle events at end turn...