Oh, apologies, you had gone through enough steps correctly that I assumed an advanced skill level. You'll want to put the modtechnique in every file where you see it say <entity>, add it in just before the > so that it looks like <entity modtechnique="replace">. For example, if you wanted to modify the Histri's colour, you could replace like so:
<entity modtechnique="replace">
<class>faction</class>
<type>Histri</type>
<factiongroup>illyric</factiongroup>
<article>Factions::Histri</article>
<flag atlas="flags" sprite="histri"/>
<logo atlas="factions" sprite="histri"/>
<guicolour>#5398d9</guicolour>
<unitcolour>#5398d9</unitcolour>
<unitshield shieldtype="normal" atlas="shields" sprite="histri"/>
<unitshield shieldtype="peltast" atlas="shields" sprite="histri"/>
<unitshield shieldtype="sail" atlas="shields" sprite="histri"/>
<unitshield shieldtype="rectangle" atlas="shields" sprite="histri_rect"/>
<attribute attrtype="raiddamage" op="mult">0.75</attribute>
<attribute attrtype="speed" op="mult">0.1</attribute>
<attribute attrtype="maxmorale" op="mult">-0.15</attribute>
</entity>
You could also use "merge" to change only certain parts and not need to copy the entire file over. That would look like this.
<entity modtechnique="merge">
<class>faction</class>
<type>Histri</type>
<guicolour>#5398d9</guicolour>
<unitcolour>#5398d9</unitcolour>
</entity>
You will actually need to do this for every file of the mod. It's done this way so that people can replace and merge different things. If it helps, you don't need to have everything in different files; you could have a file that looks like
<entitygroup>
<entity modtechnique="merge">
<class>faction</class>
<type>Histri</type>
<guicolour>#5398d9</guicolour>
<unitcolour>#5398d9</unitcolour>
</entity>
<entity modtechnique="merge">
<class>faction</class>
<type>Rome</type>
<guicolour>#5398d9</guicolour>
<unitcolour>#5398d9</unitcolour>
</entity>
<entity modtechnique="merge">
<class>faction</class>
<type>Samnites</type>
<guicolour>#5398d9</guicolour>
<unitcolour>#5398d9</unitcolour>
</entity>
</entitygroup> and that will edit the Histri, Rome AND the Samnites all in the same file. Just make sure it begins and ends with <entitygoup> and </entitygroup> like in my example.
If you need more examples, there are several uploaded at https://pub.longbowgames.com/hegemony3/mods/ (these are the example mods created for the tutorials we made on our steam forum a while back).
Hope this helps, let us know if you have any more questions!