I guess I'll bring this up with the group and see what we decide. We already adopted a version of the Admirals listed in the House Rules Compilation. Everyone gets a free Admiral with 2 traits. We' also decided that, for the Campaign, Admirals don't raise the PL of the ship their on. Kinda borrowed from BFG where you can buy "Admirals", called by various names there, but in a Campaign you get a single free one. Makes sense and makes them usable. I know some may yell that this causes balance issues, but everyone has one so it balances its self out that way. As is they're near useless, especially since they have to be on the largest ship.
Oh, as for his placement on a ship. According to Greg, as stated above, he is only required to be on the largest ship in a given battle. So, if I had mine on a White Star GS, I'm running ISA for this campaign, and decided to include my Tara'Lin in the same battle as my Admiral I'd have to move him to the Tara'Lin. Problem with this is that I was under the impression that moving Admirals was done at the end of the turn. Does this mean he can be transferred mid-turn? If so, I'd assume he could only be transferred once per turn.
Oh, and I agree with l33tpenguin. I think being forced to place them on the largest ship is restricting and not entirely fluffy.