This is controlled by variable MIN_CITY_RANGE in ...\Beyond the Sword\Assets\XML\GlobalDefines.xml:
Code:
<Define>
<DefineName>MIN_CITY_RANGE</DefineName>
<iDefineIntVal>2</iDefineIntVal>
</Define>
One way to edit this would be to create a mod where you put this code
Code:
<?xml version="1.0"?>
<!-- edited with XMLSPY v2004 rel. 2 U (http://www.xmlspy.com) by Tim McCracken (Firaxis Games) -->
<!-- Sid Meier's Civilization 4 -->
<!-- Copyright Firaxis Games 2005 -->
<!-- -->
<!-- Global Defines -->
<Civ4Defines xmlns="x-schema:CIV4GlobalDefinesSchema.xml">
<Define>
<DefineName>MIN_CITY_RANGE</DefineName>
<iDefineIntVal>2</iDefineIntVal>
</Define>
</Civ4Defines>
inside ...\Beyond the Sword\Mods\MOD_NAME\Assets\XML\GlobalDefinesAlt.xml and change the value from 2 to something else where MOD_NAME is the name of your mod.