I agree that neutral cities are inherently unbalancing and a large random factor. On the other hand, I do think they're an interesting challenge in the early game. They produce raiders (which can be potent with revolting raiders enabled) and more importantly they block your expansion.
Radical idea: Neutral cities cannot be captured, only razed.
They're still well worth capturing for the easy XP, gold, terrain and threat reduction. This way you're also forced to capture wizard cities if you want access to additional races, that's a huge advantage and with neutral cities you even get them well developed. It also allows you to balance Inquisitor better.
Other changes:
- Change neutral city size to 6-10
- Remove the growth cap
Radical idea: Neutral cities cannot be captured, only razed.
They're still well worth capturing for the easy XP, gold, terrain and threat reduction. This way you're also forced to capture wizard cities if you want access to additional races, that's a huge advantage and with neutral cities you even get them well developed. It also allows you to balance Inquisitor better.
Other changes:
- Change neutral city size to 6-10
- Remove the growth cap