Yes, your summary is how I understand it as well. @jneapan sent me this link about it: The Honorific Form, the Humble Form, and the Polite Form (there’s a section titled “Alternative Form: To Use the Passive Form”).
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I just took なんということなく to be a longer version of なんとなく.
I think なんという(こと) (written in kana) is always a set phrase in which いう doesn’t literally mean ‘to say’.
I took the お世辞 to refer to all the (dishonest) flattery he receives from people in his court. So in the first sentence, instead of responding with insincere flattery, the farmer is honestly kind. In the second sentence the lord has just returned to his castle and is “respectfully” received again by his servants and he is thinking about how he will never forget how the farmer touched his heart because of his simple, carefree life, and how he was kind without any boot-licking.
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O yeah, I thought this was confusing too, but based on a number of example sentences on Reverso, I get the impression that this can be interpreted both ways: that ない + かわり can mean “instead of not doing something …” but can also mean “to not do something and instead …”. I guess the context makes clear which it is. (The placement of the comma makes it especially confusing for us westerners in this case but don’t get me started on Japanese commas… 
)
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It’s actually the same pattern we have in ありがとう and おはよう as in: “au” becomes “ō” because it is easier to pronounce.
ありがたい → ありがたう → ありがとう
はやい → はやう → はよう
うまい → うまう → うもう
(Haven’t read all of the posts, so if this has been discussed before, please ignore.)
This week’s story was indeed a bit harder to read due to all the keigo, but I liked it. And this time we actually have a story with a very clear and simple message.
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I just realised what your question here is about. I think 生活 is only the subject of the phrase that ends with 簡単で (where で is a conjugation of です – not the particle で) and maybe also of the next phrase: his life could be carefree, but it also could be the farmer who is carefree). The phrase that you marked in bold has no が-subject, so there the farmer (the は topic; edit: strike that, he isn’t the は subject; see discussion below) implicitly becomes the subject of the phrase. That’s how I arrived at my translation in my earlier comment.
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I interpreted this sentence differently:
殿さまは、X が身にしみておられまして、それをお忘れになることがありませんでした。
X sank into the lord‘s body and he could not forget it.
Now what is X?
百姓の生活が - The life of the farmer (this is the subject of the whole X)
いかにも簡単で、- being really simple,
のんきで、- being carefree
お世辞こそいわないが、and although he was especially not making any compliments
しんせつであった - being friendly and kind
の - this is the nominalizer for all that came before, to turn that long description into one „thing“, which is our X.
Note especially the use of keigo in the main clause (because it refers to the lord) vs. no use of keigo in the X (because all of it refers to the farmer).
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Okay, I see what you mean. I messed up the は-topic in my head when I wrote my previous comment (I thought that it was the farmer, but it’s the lord), so my explanation didn’t make sense. 
However, I still have a hard time seeing how 百姓の生活が can be the subject of the whole X, because then you run into the problem that @Phryne mentioned: it doesn’t make sense to say that “the farmer’s life wasn’t making compliments” or that “the farmer’s life was kind”. So, somehow the subject changes halfway from the farmer’s life to the farmer himself. Maybe this is just another one of those the context makes it clear so the explicit subject has been left out situations. 
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I looked at the sentence freshly again and I think @NicoleIsEnough interpretation makes perfect sense.
The が in しんせつであったのが is the subject marker.
The が in 百姓の生活がいかにも簡単で is just a mandatory が because the below is a complete clause:
百姓の生活がいかにも簡単で、のんきで、 お世辞こそいわないが、しんせつであったの〜
And the reaction from the lord was the part after, so just like Nicole broke it down:
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Yes, I agree.
Yes, I agree that is a complete clause (although I don’t really know what you mean by a mandatory が).
I think we’re all pretty much in agreement 
For me, the sentence breaks down as follows
The lord (殿さまは) couldn’t forget it (それをお忘れになることがありませんでした) that it had gone straight to his heart (身にしみておられました) that the farmer’s life had been so simple (百姓の生活がいかにも簡単で) and carefree (のんきで) and how he (the farmer) hadn’t replied with (insincere) flattery (お世辞こそいわないが) but had been (sincerely) kind (しんせつであった).
(I hope we actually answered @Phryne’s question somewhere in this discussion 
.)
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The person carrying out an action in a clause can’t be pointed to with は, because that’s reserved for marking the topic, so が has to be used instead, even if the executor of the action in the clause is oneself. Sometimes that が may seem awkward, though, because it kind of distorts the flow of who does what to what:
自分が描いた絵 - The painting I painted myself.
I really couldn’t put my finger on it, because I felt the こそ here is fairly important, but it looks like you translated it very nicely 
.
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So…
We can see this as a complete sentence:
百姓の生活がいかにも簡単で、のんきで、 お世辞こそいわないが、しんせつであった
Which we can break up as:
百姓の生活がいかにも簡単で
The farmer’s life being simple,
のんきで、
[the farmer’s life] being carefree
お世辞こそいわないが、しんせつであった
[the farmer] being kind and not saying insincere flattery
So there is an implicit subject change halfway through? That makes me wonder if のんき still applies to the farmer’s life or the farmer himself
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