I would suggest doing the opposite of Randall Flagg and playing with it over an extended period before jumping to the easy conclusion.
I'd agree with you on this point about most things in life. But in the case of this particular leader, zan_laurin said he used the exploit six times in a 700ish-turn game, which is a tad less than 1 per 100 turns. To me, that sounds incredibly powerful not necessarily because of how many CSs you can get but because:
1.) You can do it anywhere on the map
2.) You don't suffer the takeover penalties (except when I did it and I still can't figure out how I got stuck with a bunch of unhappiness)
3.) You don't suffer army damage
4.) You get all the crap in the city
Probably other reasons I can't think of as I'm typing this, but the only thing standing in your way is money. Conversely, if Austria is AI it can totally ruin the revamped CS concept. Guess you could say you yourself can ruin the revamped CS concept by playing as Austria, but you're getting a ton more benefits than if you relied on CSs to reward you intermittently, so unless you're a purist to the Nth degree about not ruining revamped concepts in general, you'd overlook that. All these reasons are evident after playing once with Austria, you don't need to play it any more than that to see if it doesn't hold true.
I don't allow Austria in the game unless I'm playing Austria. In fact, I'm tempted to do what Randall Flagg did and remove it completely because it is genuinely lopsided.