I would only want to see generic CIV city razing under a certain small population size. I like the idea of some sort of modified/limited ethnic cleansing. Here's my problem with generic razing: compared to other events in CIV, it is totally unrealistic once one enters the middle ages and especially in later ages once one has 'cities' which effectively represent entire states or small countries. In generic CIV terms, it takes longer to build a cottage, a road, or a mine than it does to raze a city of millions of people which has stood for 1000s of years. It also takes longer to pillage a fully-developed cottage (i.e. town, 3 turns?) than it does to raze a city of any size, which doesn't make much sense to me.
Once upon a time, I saw a mod (sorry, can't remember the name) which allowed a slow-motion type razing. I think you needed a unit (an engineer or somesuch) who would do the razing, and it would take X number of turns to accomplish, during which time a certain portion of the buildings/population were destroyed; meaning that the city's former ruler would have time to counterattack and retake the city and still have something left to salvage.
In terms of realism for 2009, complete-razing seems untenable to me. But ethnic cleansing is very much a realistic event. But how to do this in CIV? If there was a way to cleanse a portion of the population which is not desired (e.g., different religion, different ethnicity, as shown as a percentage of the overall city population) that might work. Obviously, this should take a while to accomplish, should have some functional limit on amount cleansed per year or per turn (say, one population point per turn max depending upon number of units participating, and cannot reduce a city below size-1?), should have a very-heavy diplomatic cost, and should even have an unhappiness cost for one's own otherwise-loyal population (like the diminishing cannot-forget-your-cruel-oppression slavery effect). I would think it should require some amount of military units stationed in the city to carry it out, during which time they cannot be doing other activities (including healing, including defending or attacking -- if they do another task, then they don't count towards the cleansing effort during that particular turn).
If cleansing occurs on a slow timetable, it becomes something which opponents can attempt to stop (via intervention, UN resolutions, etc, which they would need to get some sort of diplomatic credit for) and something which the oppressor can choose to stop later on (e.g., like building a wonder, you can choose to stop building it).