1. two square limit doesnt seem a big deal, i mean, if theres two resources that close then you should just build a city there.
2. why would you want to remove a city that costs nothing and has strategic importance? and once an enemy encounters it theyll destroy it automatically since it will only be size 1
3. why would you want to buid improvements on it? youre already getting the resource, because cities auto-hook up any resources theyre built on, and theres no yields to want for, since an outpost is built outside your borders.
4. youve got a free city fort with upgrade capability (build say herbalist, walls and such), that collects a resource for you.
you would prolly have to create code to disband the city once it enters cultural borders, and not allow building within cultural borders. also maybe not allow riots and cultural switches in the outpost.
the key difference from a settlement would be that its borders is a 1 sized square, and it wouldnt have any culture buildings available.