Continued.
The Arab guy broke up his empire when he got feudalism (in short the Arabs are now feudalistic government). You break up during feudalism as well (I am saving Republic and Monarchy for later). You start researching like mad. Since you are in Feudalism, you can research Chivalry fairly easily. Of course, you now only have 6 cities when you used to have, maybe, 30 but that's ok, because many of the outliers could not contribute significantly due to distance from your capital. Additionally, since you used to be in despotism, many of the techs were getting way too expensive to research in that form of government.
After Chivalry you get Monarchy (the real kind, not the Civ2/Civ3 kind). Monarchy is also fairly easy to research because it is a natural flow from feudalism. You still have the same 6 cities, although you are also bothered by occasional skirmishes from those pesky French who seem to want you to be off the mainland. Meanwhile, you note that the Arabs have taken northern Africa and the Iberian Penninsula. You are sending troops to the mountains just at your southern border to prevent any further advance by them and they are otherwise engaged in a major war with the pesky Turks (who never joined them during your abortive previous war).
You switch to Monarchy and, as it turns out, since you don't have all that many cities, the transition goes smoothly (i.e. your civ stays together). You start researching Astronomy and you send emmisaries to the Chinese player. You note that he seems to have had it easy as his only real threat was India which did not attack him as it had its hands full with the Messopotamian/Arab player. China has not switched governments from despotism, deciding instead to take advantage of his peaceful situation and put all his money into research, leaving most of his military to remain ancient.
The Chinese guy has taken the time to get the tech Gunpowder, but does not have Monarchy, Education, Astronomy, Monotheism or Theology. You have all of the above and go to your Trade, Foreign, or Scientific advisor and discover that Monarchy would take the Chinese guy 45 turns. Education would take 55, Astronomy is unattainable without Education, Monotheism would take 35 turns, Theology is unattainable without Monotheism. You could research gunpowder in 40 turns (at a greatly lesser cost than the Chinese who have 27 cities in despotism). You decide to make an offer to the Chinese: Gunpowder for either Monarchy or Education and silks. The Chinese guy decides that he still likes his empire so he takes the offer of Education (allowing him to build universities) and gives you Gunpowder and silks.
The silk trade requires that you go through the Arab territory so the Arab guy has
because he gets lots of money from the transaction. He uses the money to finish off the evil Turks and re-establish his dominance over the remainder of his former empire. However, he is still in Feudalism because a switch, when he has 25 cities, is going to break up his empire. Now we are coming to the mid to late Middle Ages.
You have gunpowder so you head out to metallurgy, which would allow you to ignore the effects of the Chinese wonder The Great Wall (it should not be the Chinese discovery of metallurgy, it should be the attacking power). You then get Military tradition and have, during this time, discovered that trying to take out France is going to be all but impossible because the evil Itallians and Austrians keep allying against you each time you try to make a major push on the French. Meanwhile, the stupid Germans and Vikings keep on raiding your silk caravans (i.e. you should be getting 12 happy smiles from the Chinese but keep getting a message that pirates, believed to come from Germany and Scandinavia have taken 6 of them). You finally make peace with the French, Itallians, Arabs, and Austrians and declare war on Scandinavia.
It turns out that the Vikings had not reasearched Monarchy and are pretty backwards. You invade with your Redcoats (i.e. musket infantry) and dragoons (in place of where cavalry currently are). You make mincemeat out of the Viking longships (read galleys) with your Caravels (which, due to your discovery of metallurgy, have a fairly decent bombard capability) and land your army on Norway. You capture Norway, Sweden, Finland and part of Russia (that was controlled by the Scandinavian Computer player). Poland took advantage of the disarray and captured Denmark and the Viking Civ is gone. Germany and Austria are busy in the Balkans trying to keep the Arab player from advancing too far. They are having a hard time of it because, even though they also have gunpowder, the Arab empire is kind of large and those pesky Medieval Infantry and Knights (or whatever Arab equivalent) are weaker than musket infantry, but not so much so that they can't do some major damage.
Later, the Scandinavian cities start a revolution (i.e. civil war) and due to their joining their forces with the Poles, you just let them go, with a warning to be 'nice'.
You finally get the tech Navigation and send one of your caravels west (to see what you can see). Granted, since this is a world map, you pretty much know that you are going to find a whole new continent, but we're just making suppositions here. On a random map, if you only covered 1/3 of the world so far, you would probably expect there was at least one more continent out there.
Your caravel reaches the North American continent and you find very primitive people living here. The Iroquois have really not developed well because they, the Aztecs, the Mayans, and the Incas have been fighting wars for the entire game. They have reached the tech Monarchy, but not Chivalry and they are all still in despotism.
You find that for some very minor techs (to you at this time) you can trade the Iroquois for 1/3 of North America! You do this, and BAM! you are now the most powerful nation in the world. You went from 6 cities to 15 in a single shot!. Due to your advanced government the cities all the way across the Atlantic still give about 75% of production and money to your coffers. You immediately start building them up with libraries, banks, cathedrals, etc. Since these cities were sold to you, their marketplaces, temples and harbors remain intact. All of the people start out as Iroquois but over time, they will switch to British.
Heading toward the very late middle ages you notice that you will have a very hard time researching Democracy because you never researched City States early in the game. You are not allowed to go back for that tech because you needed it before you switched ages. You could research Republic, but doing so will automatically make all cities over 12 rebel and begin their own republics. You decide that you don't want to hurt your future like you did at the end of the AA so you go for Republic (which takes you 24 turns, it would have been 12 if you had ever been in City States). By this time you have set up a pretty good army to recapture the three cities you know you will lose to Republic. When those cities rebel, they immediately make an alliance with all of the American civilizations (the cities are located in the Florida/Georgia/Alabama region) and you have a major fight on your hands. Meanwhile, the pesky French and Itallians have now also reached the Americas and start trading techs to the Aztecs and Mayans for their share of the Americas. You expected to be fighting guys with balls and chains and instead you are now coming up against musketmen! You have to sue for peace and let those extra cities go.
Meanwhile, back in the Balkans, the Austrians, Polish and Germans have joined into a single entity in order to try to better hold back the Arabs. They now have a fairly large size empire and could rival your British if you don't keep them fighting the Arabs. If the Arabs decide to switch to Monarchy or Republic in order to get the faster tech rates, their empire will collapse into civs with size 6 or so.
If you decide to research Democracy, you will not get the automatic break-up penalty (that is all cities over 12 defect) since you already researched Republic. However, if you decide to switch your government into Republic or Democracy, you will get the empire-breaking which will allow you to choose 6 (or whatever) cities and the other cities will split into groups of 6 or so also. Democracy is looking pretty good since the Industrial Age techs are very expensive in Monarchy or Republic. Thus you need to be in either Democracy or some other advanced government (maybe include Constitutional Monarchy, Fascism, Communism in the 'modern' governments).
I could continue this description but I think that my point is made. This system would absolutely eliminate dominance by a player out in front in the early stages. The player would have to create carbon copies of himself in order to advance quickly, since change of governmental systems would be not only lucrative but almost crucial to advancing. Change of government would create new civs (unless someone was playing One City Challenge or 5 City Challenge) that had the same techs and the civ that spawned them!
The biggest problem that I see with the system is the victory points. My suggestion would be, give each of the new nations the same victory points as well.