Ok, I actually love this idea. Captured cities and their territory should become wildlands. It needs new graphic sets for the city though, it should look overgrown and derelict....obviously not a place inhabited by civilised creatures. It becomes a sort of 'uber lair' for whatever it was that initially captured it, spawning similar units like a normal lair but triggering a city battle with whatever stacked up monsters are in it. When players capture it the population starts from 1 again and all buildings which required more than a village are destroyed.