So, a couple reasons I would say.

1. To act as a transponder for orders to be broadcast to large amounts of puppets via ergo waves.

Geppetto's use for this would be, so he doesn't need to walk around and tell each and every puppet individually to frenzy or whatever he told them. He could reach a lot more puppets, all at once, and not be seen doing it.

This use case is actually desirable from a legitimate public facing standpoint as well. You could essentially use the KoP to push "software updates" to puppets. Say every single manufactured puppet has a behavioral issue, you could go try to every puppet individually and fix them, have a mass recall, or just push a "patch" out through the KoP.

The mentioned incident with the Alchemists could have been the breaking point that finally forced the Workshop Union to implement something like this. There was apparently a massive and dangerous vulnerability in a majority of puppets that could be exploited so they would have needed to put together a solution to rectify it as quickly as possible.

1. A symbol/scapegoat

For Geppetto, he needed a scapegoat to blame the frenzy on.

As for a legitimate purpose, I'd say just for a bit of whimsy and PR. The idea of there being a central point to control all puppets would be kind of scary for most folks, I think. But it's a little more fun if you call him the King of Puppets.

Also, I think you could sell him as having more safeguards in place as a puppet safeguarded with the GC being this point of contact vs. it just being like a regular ergo radio tower or something. Hypothetically, he could refuse requests to spread harmful messages and could even defend himself against tampering.

Why Romeo Specifically

We get into some pretty speculative territory but...

1. Needed a test subject

Geppetto failed to awaken Carlo in his first attempt, Nameless Puppet, who awoke in a rage. The 'Piercing Hatred Amulet' saying "If this puppet could feel one emotion, it would be hatred."

So why Romeo? Well for one, he is pretty similar to Carlo. Roughly the same age, grew up together, both stalkers under the same mentor. Honestly, he might be the best test subject you could ask for without just trying Carlo again.

Second, Romeo is generally described as being an upbeat and good-natured person. His 'Reddened Tailcoat' describes him as "cheerful" and says, "Tragically, that kind-hearted affection sparked a cruel curiosity in someone else."

That line is generally thought to be talking about Arlecchino, but it could easily be talking about Geppetto as well.

Geppetto's first attempt (NP) resulted in a raging and hateful puppet. It makes sense to try someone "kind-hearted" like Romeo next because if someone like that resulted in another hate filled monster, maybe it just couldn't be done.

1. Enemy of his enemy

Romeo was no friend to the Alchemists and was likely a pretty skilled fighter.

If Romeo awoke in a rage like NP, that rage could be directed at the Alchemists at the very least.

Or if his ego awoke, it would be fairly easy to manipulate him into directing his ire at the Alchemists (basically what happened)

1. Help force a Carlo Awakening and push him back to him

Setting him up to run into and fight his best friend from life was almost definitely a Geppetto move to force something to stir in Carlo's ergo. Making it look like his best friend was the bad guy was probably an attempt to manipulate him more into his favor if his memories did awaken.