Honestly, the biggest missed opportunity with free cities from negative loyalty is that they can't eventually evolve into independent city states or even new civs.
There are a whole slew of changes/missed opportunities that could add a lot of dynamism to the game.
Right now, Civ VI is essentially Static. At the start of game all the Civs and City States that there will ever be in the game are present. All the Tribal Huts that will ever be are present. The only changes after Turn 1 are new Barbarian Camps popping up and cities changing status from City State/Civ City to Free City (and back again) or City State/Civ City to Smoldering Ruin.
That Free Cities remain basically Barbarian Cities until they either rejoin their original Civ, join a new Civ, or become SR (Smoldering Ruin) is a huge missed opportunity.
That Free Cities conquered by a Civ don't have an 'extra' chance of revolting and becoming a Free City and then the City State again is a huge missed opportunity (for one thing, extra problems keeping a City State loyal might go a long way to keeping City States on the map instead of watching them disappear one by one as the game progresses)
That cities that revolt never turn their new 'freedom' into anything other than Barbarian City (Free City) or Join Another Civ is a huge missed opportunity to add new Free Cities or even new Civs to the game.
That Tribal Huts or Barbarian Camps left alone for a few thousand years never become anything else is Fantasy, and bad fantasy at that. Why shouldn't they ask to join the nearest Civ, or develop into new City States, or pack up and migrate?
Changing any single one of these things would make the game far more dynamic and continuously interesting, especially in the mid and late game, than it is now.