I have a feeling that this mega city tactics could see a future nerf. This is only possible due to the fact that you have no fear of starvation in your cities. If the concept of food and feeding your citizens requiring 2 food per citizen, as in Civ4, is at works here, then this strategy will simply not work at all.
The thing is, you are producing nothing but settlers in majority, if not all of your cities other than your specified mega city. Any good player will know to scout out your land with units like spies or caravans to see where you are pumping your settlers to. Depending on the given circumstances, a few set of legion armies, which isn't too hard to obtain, can overrun your weakly defended cities, putting an end to this ordeal.
I doubt people using this strategy will put adequate enough defenses in their cities to overcome a routine invasion force. And at higher levels, I really wonder if AI civs will leave you alone to do all this.