Tommy, I thought you dont care about changes much and that any rules will do as long as you win.
You explained current state of things pretty accurately. That is really how game is played now.
Changes are in right direction, but there were so many threads about this problems that I think we should go further. I'd rather not only nerf GS, but also buff other GPs.
That is how:
http://forums.2kgames.com/showthread.php?113991-Total-redevelopment-of-Great-People
I have tons of detailed calculations and analysis on these changes. Freely ask anything (but if you read the link, its better).
Changes about GPs are that they all have 4 abilities:
GS: (for example)
1) era-dependant instant science:
--A-/--C-/--M-/--R-/--I--/--M--/--F--
100/300/600/1000/1500/2100/2800
And 10 turn delay after each use (just like with culture bombs)
2) +3% of difference between your total science and total science of scientifically best player is added per turn during 10 turns (total science is sum of all researched techs' cost)
3) adds building that gives +50% science in city (can be used twice per city, second after scientific theory)
4) settling. Early means before scientific theory. Mid - after. Late - after plastics.
Early / mid / end (in brackets with freedom finisher)
- 6 - 9 (15) - 12 (18)
As to trade. Your solution eliminates "sell-war-sell" or "sell-pillage-sell" problems, but...
Resource selling turns game into a trading tycoon. Its extremely cheap way to get huge amounts of money. Selling 1 luxury gives you 8 (!) GPT. EIGHT! Thats almost 3 times more than by working an improved resource. Who on earth pay that much for 4 happiness? Of course only AI. Have you ever bought resources? Maybe late game if you have 1000+g, warmonge, and do not have copies of res... (lol, thats impossible). Only if Im at -10unhap I can consider doing this, but AI buys them even if has 20-40+happiness. -> EXPLOIT.
And this can have simple solution: cost AI will pay for lux depends on its hap.
If its 10+ they will buy it only for 2gpt,
if 0-10 for 4gpt
if -9-0 for 6gpt
if -10or more for 10gpt.
Something like that. And RAs can be easily nerfed as well by increasing cost and its scaling. 250-400g in classical era for example, 1000-1500g in modern. I dont like them at all and want them be eliminated at all, as they encourage ganging. (3 allied civs receive 2 free techs each, but 2 only 1). But with such costs it'll be just expensive way to improve a little in science.
These 3 changes make current playstyle (that you described) impossible. (but I also really want to buff other GPs as well

)