I don't think you can settle waned units as prophets.
No, they can't. Which is why I said:
Unless you're worried about generating Great Prophets or Great Commanders, I'm not sure GP control is necessary. Waned units can be settled as any other type of Great Person.
If you are going for an Altar victory, or plan to build multiple levels of the Altar to allow disciple units to be trained that are almost ready to wane, then the method I described would be undesirable. You would want to minimize the amount of non-Prophet
sources you have (at least until you have all the Great Prophets you need), so that you can upgrade the Altar as quickly as possible. It's a completely different strategy.
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I don't think that it is immediately clear that settling/building everything in the capitol early on to maximize the advantage of God King is necessarily much more powerful than specializing 3-4 cities. In most games I find it necessary to switch out of God King for maintenance reasons, but God King plus settled great merchants may more than make up for it.
I didn't mean to say that one strategy was better than the other. I was just describing a strategy I might use to someone who, I thought, was looking for a strategy. You didn't mention in your first post that that you were planning on using the Altar, so I didn't think that suggesting a non-Altar strategy would be out of place.
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If your goal is to generate lots of Great Prophets, then Aristocracy isn't so bad. You won't want to fill up every possible specialist slot, just the priest slots - of which there is usually a limited supply. Maximizing food potential isn't as critical when you are dealing with fewer specialists. The extra commerce from Aristocracy would accelerate the research of the expensive techs that unlock the later Altar stages.
Theocracy will give you an unlimited number of priest specialists, but it comes somewhat later, and honestly I think Republic would be a better switch so that you can get the
bonus. You can create a lot of priest slots by building as many of the temples as possible, which as I mentioned will also help with happiness generation.
Spreading out your settled Shades isn't so bad if you're not running God King. I would say that you'd probably want your production city (the one you put your Engineers in) to be the same one that is your research city (so that an Academy and the Crown can boost the
output of the Engineers as well).