I often find myself immersed in warfare and knocking down my opponents cities one after another after another. Problem is, I don't always want all those cities - either because of poor placement, increased upkeep, or it simply doesn't fit my national goals.
So, if I don't capture, I raze. If I don't send settlers, someone else does and we end up with a mishmash of startup cities from every random civ with a spare settler. Empty land is not an option - yet neither is letting my enemy live :)
Can't there be another way?
Perhaps some sort of temporary status for x turns before reverting back to the owner civ - or becomming its own civ (of course indebted and friendly to me!)
Any other ideas, work arounds or modding suggestions?

Gift it to another civ. Especially if it is close to their borders and is a low-level city.

To be historicly accurate, the cuty would not be friendly to you, in fact it would hate you for going to war with the mother civ.

It is annoying that you have to take what you get or let the AI run wild, but that is how it was in real life.

When do you build the forbidden palace? That mgiht be able to help at least a bit.

Some sort of vassalage option. It's still barbarian (Or it's own Country, or etc) but must share with you all it's resources, and give you about 3 gold every turn?

Of course, a city could revolt and become completely independant, or you could choose to annex it.

That would just make things too easy. Conquering and holding cities is (and should be) expensive work, and neutral territory is fair game.

The solution is to bring along a couple of settlers with your invading force.

Or, adopt the AI's strategy and use it against them. When you see two them at war somewhere, send a settler or two and grab some territory.

I've noticed that the AI always keeps a couple of Settlers in reserve to take advantage of opportunities. They will even float them around in Galleons just waiting for a chance.