If you think about from a historical view point, losing the capital itself does not always trigger such civilization-wide chaotic events as anarchy, unbridled corruption or losing all your gold.
Leaders are easy to move in times of war. When the Britich sacked Washington in the War of 1812, the leadership had already escaped......it certainly looked bad to the world, but by no means did it cripple the country.
When you lose a capital in Civ3, you do pay a terrible price. You lose what is usually your largest and oldest city. In most of my games, except in later ages, my capital has the highest culture, largest population, largest industry and for all of those reasons, many of my Wonders. That's a pretty big price. Imagine how much culture you lose alone. I don't think you need any more punishment in the game than there already is.
Leaders are easy to move in times of war. When the Britich sacked Washington in the War of 1812, the leadership had already escaped......it certainly looked bad to the world, but by no means did it cripple the country.
When you lose a capital in Civ3, you do pay a terrible price. You lose what is usually your largest and oldest city. In most of my games, except in later ages, my capital has the highest culture, largest population, largest industry and for all of those reasons, many of my Wonders. That's a pretty big price. Imagine how much culture you lose alone. I don't think you need any more punishment in the game than there already is.