K does automate the settler; and there's an additional bonus/cheat I think i read about somewhere on this board before:
If you're in the middle of nowhere and there's no water around to irrigate, you can automate a settler and it'll start irrigating even without access to water. This is a cheat the AI opponents uses, so I figure I'm allowed to use it as well (although I only use it sparingly-if there's water 2-3 cities away, I'll just do it the right way and irrigate my way to the inland city)