The horse (and Methos would definitely call it "horse" despite it being a Companion that only looks like a horse and having a perfectly good name) probably does make Methos miss Silas. But in a good way, and so maybe Methos gives in a bit because Silas would have thought the horse beautiful.

And I'm thinking the wily diplomat or court officials of the other kingdom are pretty taken aback by such such a wily diplomat from Valdemar while all the other Valdemar diplomats are a bit taken aback themselves. Methos fits in better in the other kingdom and the other kingdom tries to recruit him. But really the only reason Methos is in politics at the moment is because his horse wants him to be (not that he would ever admit to doing anything just because someone else wanted it) and his horse is entirely loyal to Valdemar.

It's possible that one of the other kingdom's people tries to assassinate his horse. (The horse survives. So does the assissin, for that matter, though it's not at all a happy or pain free life in his case. The other Valdemarians are horrified. Methos goes, "what? He's still alive." The foreign emperor falls a little bit in love.)