I don't want to see one playstyle enforced on people. You certainly shouldn't have to city spam, and I want the game to be playable with a single city, but some people *like* to eXpand in their 4X games. I want to be able to build cities, and prestige is a very low number for much of the game. I shudder to think of that as a cap, either soft or hard.
A lot of this seems like a bit of a kneejerk reaction to a situation in the OP that sounds a bit like an extreme example to me. It has not been my general experience in the game thus far, not that there aren't issues.
Yes, at some point the AI factions are going to come in and start building things where you dont want them to build, because you want that land for yourself. And you'll have to take those away from them by force, or diplomacy, or influence, or what have you. That's the genre.
But usually there's more of a grace period when you can grab a chunk of land for yourself before that happens. If you really did literally get boxed in, and unable to expand right from the very beginning, either you got a tough map (it happens), or perhaps weren't being quite aggressive enough and got outplayed, if you'll forgive my saying so. Your post implied it was the first game you played with the new build. Or perhaps its more of an issue on some map sizes, and not others, which is entirely possible.
There are certainly balance issues to look at in the coming weeks, and I have no doubt adjustments will be made. I'm far more annoyed at having to play whack-a mole with all the encroaching outposts that start popping up on my borders about 40 turns in, or so. I imagine the AI is equally annoyed at the rich chunk of land I aggressively claimed and my obnoxious Manifest Destiny policy.
But I'm staunchly opposed to anything that will actually limit me to only one or two cities in the first half of the game, if I see an opportunity to make 3 to 5 good ones, and am able to to pull off the logistics. I play aggressively in 4x games, and want to be able to do so, just as I want people to also be able to turtle up in a single big city, and make a go of that. The tricky thing is to find a balance to supporting both.