The road ability stuff seems hardcoded, you could probably modify them completely away if you wanted and do manual road building instead.
Also is it possible to limit an outpost so that it can't be built more than 5-10 tiles away from current cities and outposts?
You can modify this in elementaldefs.xml. Don't think you can make it for cities as well easily though.
<MinDistancesBetweenOutposts>3</MinDistancesBetweenOutposts>
Just keep in mind consulates can be very important (outpost upgrade to city), and as such having 3-4 outposts next to your city is a valid strat.