No hurt at all.
In medieval era, threshold is 100. How can you reach 100 pop before renaissance? I can acquire 15 cities and only my capital over 16-18 pop. Even if you go beyond 100, the penalty is not too big, and you can always whip.
I tried a Spanish 600 AD game. Researched engineering-guild-compass-optics-astronomy (got it in 1360), It's 1430 now and I got about 18 cities all around, tech penalty is nothing compared to city number maintainence cost.
And this modification is crucial for Arabs. In past Arabs got 7 cities and 2 settlers from start, and their tech rate is horrible. From now on Arab UHV will be much easier.