You are right, there is the exploiting problem that has to be treated, and there are balancing problems. The loot can not come from nothing, it has to be bound to something, be it poulation or builings or the amount of gold of the cityowner.
Maybe we forget the fancier things and try to make a very simple pillaging mechanism first.
There are two motivations to do such a thing. Firstly its historic. Many - if not most -military conflicts where more about pillaging than actual gaining control of the territory. Think about the raids of all nomadic tribes. The venetian raids, or even the crusades. And the organisational effort of "ruling" a newly conquered territory shouldn't be underestimated. Secondly there are situations where you don't want to hold a conquered city, but you don't want to raze it either. So there's the need for something in between. Granting the city independence would be one possibility, but i think some kind of pillaging mechanism would be more fitting.
In the simpliest case you get only gold an the amount is bound by the number of conquering units. That means every unit can carry only a certain amount of gold, lets say 20. Furthermore the amount of gold is bound by the availably money, that means the money the owner of the city has. If he has no gold, then you get nothing. The teleportation feature remains. Every unit that pillages is immeadiatly teleported back to the capitol.
If you want to improve it, you could add a treshold of save gold that cannot be looted from the cityowner depending on the total number of cities of the owner. Maybe 400 gold for each city. That means if you have 10 cities you have 4000 gold that is safe from pillaging. That prevents that you steal all the players gold by pillaging the same city over and over again. A more fair formula would take the number of population points into account. I'm not sure what the current gold, that you get upon conquering is based on. Maybe this can give us some hints.
The units are moved back to the capital, but what prevents you from pillaging that city continueously?
What prevents you from conquering a city, making peace with the owner, granting it beack, declaring war, and conquering again?
Theoretically this is also doable. And you get gold every time you conquer the city. But there are mechanisms in place that make this kind of behaviour less attractive. The limited amount of money of the owner, the 10 turn peace limit and the diplomacy penalty upon declaring war. Similar mechanisms can be found for the pillaging feature.
