As far as CS, what I did was space them out at medium level which is 7 tiles and instead of 28, I run 14 of them. On a Giant map its been working out so far. However, on a normal game map I see your point, 4 tile spacing would be about the max.
Anyway, the game has been fun. As China I have tons of room to expand. The only thing that worries me is the total unaggressiveness of major civ AIs. Hopefully that changes as the game progresses. If they let me get too strong, they are done for. I may have to move up to Immoratal level next game. Other than that its been a blast. So far I am only in the Medieval Era so there is plenty of time for the game to develop. If it gets interesting in the military scheme of things later on, I'll add some screen shots.