After thinking about it, I think this is my opinionated stance on Venice.
I like city states. I like making friends with them and getting the good stuff they give me. I build tall, peaceful (when possible) empires, and shoot for peaceful victories. I rely on city states for resources, both Lux and strat, as well as the inherent bonuses provided by the Patronage tree (extra science, great people, what have you.)
I can't forsee any situation where a game with venice wouldn't screw with this. I was in a team game with a guy playing venice, and the whole game all he did was puppet city states. I was literally ready to go to war with my own teammate because he kept stealing my allied city states, and I had no way to stop him. That does not make sense. That is not fun. That is a broken game mechanic.
Assuming, of course, one is in any game where somebody is playing Venice, and assuming one relies upon city states for any of the above, or any other, mentionables, Venice throws a total wrench in the works. It's not by malicious intent of either party, but by the actual design of the civ, that he will inevitably piss off any other human player and have to go to war. I see no way around this. You can play a peaceful game as montezuma if you really want to. You cannot play a peaceful game as venice, unless nobody else on the map cares about city states, or venice takes great care to only puppet unallied city states (which is impossible after mid-game. This is completely counter intuitive to venice's real-world history (I never heard of "Venice the warlike" in history class), and makes no sense to me as a game mechanic.
For those reasons, I don't see why Venice was given this ability, I don't see the though process behind the whole point of this civ, and I don't like it. In my opinion, I don't want to play a match with anybody playing as venice (and to a lesser extent, austria) which can be impossible in online games, especially if somebody randoms it.
That's my two cents, you can argue against it, but I've got my feet pretty firmly planted on the fact that Venice was not properly thought out, and doesn't need a simple patch, but a complete rework without the current mechanic (which of course will never happen as it has a UU dedicated to that specific purpose.) In my opinion this isn't a "learn to deal with it" scenario where you can formulate a plan to counter Venice. There's only two options, kill venice or have city states stolen. I don't like either of those options. That's why I don't like Venice.