Personally I care very little for the Holy Tiara. However at the same time I object to handing it over to the Lizardmen for free. Might I remind everyone that this has already caused the Dwarves to invade our realm and refuse to accept the Empire's sovereignty over her lands.
Imagine what we're fighting for divided into two groups. On the one hand you have objective things;- land, taxes, gold, trade, inheritance, lives etc. etc.. All those things that people used to fight wars over in the C18th. On the other we have subjective things;- honour, pride, home, safety, good etc. etc. etc.
From how I see it an alliance with the Bretonnians means we hardly lose out in terms of money or land. The current terms seem to show us to be allies and equal brothers in arms. Fair play. However just giving over the trinket to the Lizardmen seems so pointless. Not only could the other uses for it get the Empire better terms, but handing it over like this means that all those things we are going to fight for, just as the right to for Franz to rule his own Empire, are non-existent. We might as well have let the Dwarfs march in dressed for war, take the crown, set up a few Karaks and be off.
Secondly, unlike the Dwarfs who are approaching anything still warm with big grins (necrophilia jokes here please), I don't think we should just be approaching anyone out of the blue. If we did, why not Chaos? "Hey, you know how much you hate stunties, and how much the orcs annoyed you in the Storm of Chaos - why not help bolster our scores?". An alliance, especially one this strong, just isn't justifiable in terms of fluff.
In conclusion then, I'm pro-Brettonian, anti-Lizardman.