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Ideally there would be three ways to colonize a province:

1. A trading post, which will cost you a merchant. This type of colony would net you trade income and would only slowly grow into a (colonial) province
2. A mission station, which will cost you a missionary. This type of colony would result in the conversion of the province and would grow faster than trading posts but slower than plantations
3. A plantation, which will cost you a colonist. This type of colony would result in the culture become your own and it would grow the fastest of all

Even more ideally, multiple countries would be able to colonize the same province at the same time. The one that gets to the magic number first, gets to own the province and half of the others' settlers (many Dutch stayed in New Amsterdam after it was sold to the British). There'd be ways to reduce the others' settlements (attack it or buy it up, etc.)

The province would then become a colonial province and unless it's on the same continent will never become a regular province (Russia is an example of same continent). Colonial provinces would behave differently from normal provinces (in EU3 there was no difference between a colonized Maine and London).

+1 And I strongly agree with 3 possible ways of colonization.
 
America wasn't colonised by settlers. By and large, the overwhelming majority of North America was trading posts (or Missions, which is another type of settlement that should be represented separately) that evolved into settlement. The only exceptions were the English coastal colonies that started as English. Everything else outside Alaska started with French, Dutch or Swedish trading posts (and one Russian one), or French and Spanish missions that grew into settlements.
Apologies. I was thinking of colonisation of Brazil - first charter granted in 1504; first permanent settlement in 1532.
 
As a French Canadian, I would stress that I very much liked the trading post system in EU1. It allowed a more realistic depiction of New France than EU3 does, since it was clear those lands were NOT to colonize. You could change a trading post into a colony, but that should be at some cost and maybe it could harm a little the manpower of your country since you are moving people from your metropolis to your colonies. If you do so too much, you might even have an independance war on your hands, since your dear settlers would no longer consider themselves linked with your country.