In thinking about it (aside from how it may actually be coded!), I can see a place for councils. Councils, clans, and guilds/classes all kindof provide the same services from the code's point of view. They all group players in some fashion, and they all have the potential to offer them additional commands, channels, languages, etc.
In my own game, I'm planning to replace the single class structure with a competitive hierarchy of classes (guilds), so players join later guilds only after meeting the pre-reqs for simpler guilds.. and some guilds will exclude one another. That way, not every mage on the planet gets the same fireball spell, and similar localizing and regionalizing. So, from that point of view, players elect to join a guild at will, but it is computer driven.. the guild master NPC's decide who gets in, and what abilities are granted.
Clans are purely player-driven. Players can form clans at will, and they decide who gets in, and who doesn't. They also get to decide what abilities their members get (subject to availability by the imps, of course). As such, their abilities are greatly limited (or should be!), and it's up to the players to take actions for or against their members.
I can see Councils as the immortal equivalent of these things. A council might be created by immortals, and might serve mostly as a meeting vehicle -- channels and boards specific to the council's purpose. Abilities, as such, probably don't matter much since most immortals already have what they need. It might be possible, on occasion, for a commitee to induct a mortal into their group and thus grant them limited powers for the duration of a project (possibly editing room descriptions to fix typos before an area is officially opened... possibly being able to load specific mobs to help balance test... etc).
Having said that, I don't think the CURRENT implentation quite supports that... but I also haven't had the time to go look at it in depth. As Zhamel said, this would probably go unused on small muds, but on a game with a dozen immortals, handing out projects like this might be very useful.
I also don't see the need for so many immortal levels, and that need would diminish further if councils were used for this purpose. Generally, your imms fall into several categories, each of which has a set of powers they need. This is how I (mentally) split them up, I'm curious what other people do...
IMP -- need I say more? Usually only one.
arch-wizard -- all IMP powers, except promotion/demotion.
domain-lord -- anything within a zone, cannot create new zones or delete zones.
balance-lord -- can edit anything, but not create. interaction with mortals allowed.
wizard -- can build within an assigned zone, but cannot load.
tester -- can load within an assigned zone, cannot edit or create... can trans mortals for testing.