To be honest, i've never thought about it. The scenario was just the first thing i thought up when trying to incorporate dragonmech into D&D in general. I had baught the ebberon book just before and became greatly interested in the potential surrounding the Lord of Blades.
To me, mechs fit perfectly in the ebberon world. They could be a byproduct from the development of the warforged titan. i can see them being used to defend khorvair from the massive necromechs that have recently been sighted coming from the mournlands.
It's only natural that the lord of blades would see these mechs and decide to create one the likes of which no-one has ever seen (or ever will). I think Godforged woulld be magically animated, possibly even with Lord of Blades assimilated with it. He probably beleive that he himself is the Godforged and desired a new body to demonstrate his supremacy as a construct
I could totally see the Lord of Blades glomming on to this technology. I don't think I would assimilate him into the city-mech, but I would definitely make it look exactly like him. Assimilating him would take out the inevitable duel with him in a capstone to the adventure.
I might actually run the adventure as more of a "tons of steel are being imported or hijacked into the Mournlands. What's going on?" type adventure hook. Perhaps the PCs are Cyrean refugees working for their government to discover what new threat may be brewing in the Mournlands. In that scenario I might have them stop an important shipment that contains the "key" piece to finish the mech. Failure means the mech is completed and they have to find another way to stop it before it ruins New Cyre. Perhaps they would have the opportunity to steal the plans and Cyre becomes the first Eberron Mechdom. Perhaps all out war between the Lord of Blades and the new Mechdom of Cyre launches the Age of Walkers in Eberron.
There are a lot of ways to play it, so have fun with it!
I think warforged technology combined with airship/land rail technology would be a quantum leap in mech technology and produce some truly impressive mechs. Animated mechs made of Darkwood and Mithril or Adamantine could be constructed in the same manner as warforged titans. Add steam guns and buzzsaws and now we're cooking with bear grease!
I can picture Valenar elves with Rodwalkers, Darguun raiding other kingdoms for their mechs, Carrion Tribe barbarians with powered armor to fend off the demon menace, and shifters learning how to make their mechs dance and fight like no one has ever seen before.
With Eberrons "magic as technology" style, I think you will be able to integrate mechs quite easily. With the Lord of Blades' ego, I would go with the biggest city-mech there is. LOL