Yep. It could eventually be very powerful. Of course, I could also create a new terrain improvement to place here instead. Also, I was wondering if it might be appropriate to make the Citadel of Light create a Sentry Tower on the city's tile. That would boost sight in addition to eventually upgrading to a citadel.
I might implement a series tiered defensive buildings, and have them create new fort-like improvements that won't upgrade automatically but will be replaced by a better one when the next level building is added. If so, I may make the Citadel of Light and the Chancel of the Guardians be UBs for these defensive structures, providing improved terrain improvements. (I'm also thining I may want to make wall of stone create a fort-like improvement too, one and be able to create them either in our out of a city. I'd rather these be temporary though, so it would require more coding)
I'm not quite sure what would happen when such a city is captured or razed, but I suspect that the improvement but not the building would remain if captured, and that city ruins would replace the improvement if razed. I might have to add some more coding to make destroy the improvement if the building was destroyed. I may also try to make it so that bombarding a city has a small chance of destroying the building/improvement, probably reducing it to the level just below it.