From the manual, I got the impression that corruption level in all cities, regardless of their distance from capital, is the same. That didn't prove to be the case when I tried it with out of box CIV III. Is this an intentional change or bug?
This is not a bug, this is just ages past. Corruption has changed quite a lot after various patches, the manual is not up to date. This especially applies to Civ3: Conquests, but also to Vanilla and PtW.
besides, communism corruption levels in cities depend on improvements, especially courthouse and police station. the corruption defeating effects of these improvements are not negated in communism.
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