Probably would be better to keep a bit clearer distinction between IC/ATL posts and OOC/OTL posts. Just MHO.
Anywho, here are some OOC observations:
There ought to be a bit better reason for Meiji not moving to the place where the institutions of power had established themselves in a city much larger than Kyoto.
Several of the cities, including Kyoto, went by a couple of different names.
Osaka wasn't officially one singular city until 1889. What became Osaka city was spread over 3 provinces - Kawachi, Izumi, and Settsu - previous to that. Sakai was already an established independent city before the reorganization. It's entierly possible Sakai could eclipse Osaka. Or some other formulation.
The Fuhanken reorganuzation took place in 1868 and so names can be played with easily here.
Playing off of some of those...
IC:
I do find it amusing how long the old naming conventions from the colonial period have stuck around. The Japanese haven't called it Kyoto since the second Fuhanken reform - it's Keishi. (1)
As for moving it, there would have to be some big motivation. Maybe if the big fires hadn't done so much damage to Edo, it would have remained better suited? (2)
As for culture, kabuki was more associated with Edo. If the capitol was there it might be more important than the bunraku puppet theater of Sakai. (3)
You know, this is kind of a timely topic, what with the anniversary of the Great Hyogo Earthquake and all. Might not have been so devastating to the economy and general stability if Hyogo were smaller. Less loss of life, as well. (4)
1 - Think Bombay/Mumbai or Calcutta/Kolkata, for example. Keishi is an actual alternate name for Kyoto. For those unfamiliar with the term, the fuhanken reform was an organizational reform of yhe old provinces that was part of the Meiji reforms. Make of a 2nd fuhanken reorganization what you will.
2 - Edo had lots of big fires. Take the fires associated with the Ansei earthquakes of the mid/late 1850s and add a couple of big fires from other causes in quick sucession following those, and that could possobly knock Edo hard enough to keep Meiji in Kyoto.
3 - OTL kabuki is more well known worldwide than bunraku, the puppet theatre associated with the Osaka. Here we have a cultural influence of not moving the capitol as well as Sakai remaining a major city rather than a suburb of Osaka.
4 - The Great Hanshin Earthquake of Jan 17, 1995. Here, Kobe and Northern Osaka are Hyogo. (Hanshin is derived from the characters for Kobe and Osaka and referes to the confluence of the two cities.) ITTL, Osaka is much reduced and Hyogo and Sakai are the important ports. There has been some interesting speculation on how bad the next major earthquake to hit Tokyo proper. It's well overdue and could likely cause a global recession as well as resulting in hundreds of thousands if not millions of deaths. Projecting that sort of damage on the assumption that Hyogo would be built up much more.