It's a very good idea.
I remember Darth Venal did a mockup of the palace surrounded with a large vineyard style moisture farm (remember the olives in The Godfather and the oranges in Chinatown) to grow fresh food to feed the court (which ties in with feudal castles too).
Putting the Palace in an Oasis is a logical extension to that idea.
Tents and banners representing an encampment for people waiting on an audience might be nice too.