There's a tremendous amount that can be done with city-external fortifications, and there have been several posts along those lines. Personally I'd like to see a zone of control (stop movement on entering zone, reduce non-allied movement to 1/turn while in the zone), and a more exponential timeline in fort improvements with significant changes between levels (things like the ability to damage troops trying to bypass the fort, higher health and defense levels, auxiliary structures affecting battle if the fort is attacked, larger fort ZOC at higher levels, etc).
Also, different levels should require different techs (would Fortification enable lvl 1 or lvl 2?). Whether it should be built automatically or cost out the wazoo is an open question, though... if you have to build them manually, then in addition to greater base capabilities (health regen & defense) different fortification levels could unlock those more advanced capabilities for purchase. Kind of how I'd like to see unit special abilities made available to units: after certain events (level changes, equiment choices, etc) they could go to a training ground (if you've built one) and learn from a set of skills based on your warfare research level, the weapons and equiment they're using, and their faction / race.
That said, in all the discussions I've looked at about this sort of concept (both the external fortifications and the training skills into troops) I've heard nary a peep from the dev team. Maybe it's further down their to-look-into list, or maybe they're just not interested:-(