Not sure if anyone else has posted a similar suggestion, looked briefly but didn't see anything.  As I was playing last night, a nearby sovereign declared war on my kingdom and attacked my (only) city.  I decimated his attacking forces but lost my wife and child in the process.  So of course I chase him down as he retreats and flay him alive.  Something I was not quite expecting (for some reason) was for his massive city just south west of mine to go up in smoke, along with the four others I knew about.  I was cool, I finally have a second settlement (with dang good resources nearby, 3 gold mines within 4 tile range and tons of food).  But I was kind of wondering what happened to all the people and infrastructure that used to sit there.  Were they, perhaps, bound to their sovereign by some magical bond that when severed made them all disappear?

I found this quite odd.  My suggestion would be to have cities, once their sovereign falls, become sort of neutral empires of their own but in a state of decay until one of the remaining players picks them up.  A city without a sovereign could immediately go into a state of anarchy, population drops by half (people fleeing the city or dying in riots) and all production stops.  Then, as the chaos continues, production buildings outside the city walls start to collapse in disuse (one or two per turn, or every two turns).  The population will continue to decrease at some rate like 5 people per turn (-5 prestige for loss of Sovereign, with all prestige boosting improvements not functioning).  Then as time goes on, the city itself starts falling apart.  As the population leaves the city for better lives somewhere else the buildings get demolished and collapse with disuse.  Once the population reaches zero, the city is destroyed.  Something else that might be cool is if the destroyed city became a goodie hut of sorts.

Also, about the troops and heroes of the faction whose leader has fallen.  Heroes can automatically either become neutral and roam about again or just disappear into the wilds as soon as they person who recruited them is no longer of this world (ie. what already happens).  Armies in the field would disband in the same way.  But I think derelict cities should keep standing armies that progressively get smaller and lower tech in proportion to the remaining population (10%-25% of remaining pop).  They would resist certain other players when they try to take the town for themselves.  Here is a place where diplomacy and global reputation could come into play.  When approaching a derelict city one could enter a sort of diplomacy.  If your kingdom is of good repute and such, all you may need to do is send a colonist (any unit, or maybe a pioneer) to the city and it will be yours with no resistance. But if you come up and you have a bad reputation (or maybe even are a race they fear) you have to drive the squatters out by force to take the city.

This just sounds better to me than killing on man and having half the map suddenly wild again (esp. in long games on multiple continents).  Not sure how it would be implemented, or how hard it would be to do/program, but I think it would be a good change both strategically and from a game world consistency perspective.