With you on the first idea.  Unless they want to add an earth spell that restores fertility destroyed specifically in that fashion.

On the second point, I assume that will either be coming, or that modders will provide it, along with many other different maps.

Yeah, and I seriously doubt a monster group would take the time to salt the land

I'm not sure if it's quite that simple. Placing cities is what removes the fertility from the surrounding area, to prevent cities being placed too near to each other I'm assuming. So when the city is destroyed, the fertility is already gone, basically. It's a matter of "re-fertilizing" the surrounding area after a city is destroyed, which i believe (from reading other forum posts, never looked for myself) there should be a spell somewhere that fertilizes an area?

I agree. Having a razed city is definately crippling, not only when you don't like the AI's location of choosing, but especially if it's your own. I like how there are spells available to you...eventually...to restore the land so that you can build again. I don't like how those spells are hard to come by, such that by the time you finally get them, you're put too far behind in the game to still be competitive.

I recommend adding a 'fallow' time limit to a city when it is destroyed. Tie it together with the cities level. Thus a level 2 city, when razed, could remain fallow for 2*10 = 20 turns. Larger cities have more impact, thus when larger cities are destroyed, it takes longer for the land to fallow. Now, if you don't want to wait and have gained sufficient magical knowledge, you can bypass that fallow period with a spell and set up roots immediately.

As to the mountains...I like them, especially by the narrow strip of land by the sea. It gives me the feel that 'you've found a spec of land that's still habitable and you plan on building an empire out of it." I respect your opinion and agree that a 'no mountain - mountain - high mountain setting may be needed in the initial startup options of the game.

A level 5 spell is now (appropriately) hard to come by with the higher xp/level curve, so the level 5 earth spell, even if it -did- perform this task, would not remove the poor mechanics of the lost fertility.  

A current workaround:

It seems fertility is recalculated when a new structure is placed nearby.  I've had several outpost placements reveal town sites that were not there before the outpost, so often when I go on a razing rampage (and I always dislike the AI placement and increased dissatisfaction--they should hail me as their savior, damn them!--so I almost never use conquered cities unless they have unique-to-the-world buildings), I bring a baggage train of pioneers to uncover (via outpost placement) and then settle on new fertile spots that pop up.  This isn't ideal, but it's better than having to eat the current silly choices of 1) live with hateful people or 2) wipe the entire area out (and hey, fire from all the burning buildings makes for a great growth stimulant...eventually--if you wanted to align somewhat with reality, it tends to take a year for burned land to begin bouncing back, but as most know, the soil is almost instantly richer/usable after a nice cleansing purge of fire). 

I mod the Earth spell to be a lvl 2 spell. You do not need any crazy mechanics. Making the spell a lvl 2 (or 1) earth spell makes it an easy fix.