I think that its all right for Rome to represent Italy in the game. People who disagree (including Rhye) seem to be confusing two very different questions:
Question 1: Is ancient Rome the same as modern Italy? Of course not!
Question 2: Could ancient Rome re-spawn in the game as modern Italy? Yes, I dont see why not.
Even if Italy and ancient Rome are not the same civilization (whatever that means), they occupy the same geographical starting location (sort of), so they would fill the same place in Rhyes map. More to the point, there is no Roman Empire in modern times... so why not have Italy fill the gap in the map? All right, the Italians are not the same as the ancient Romans, but so what? The Abbassid caliphate, for example, its certainly not the same as modern Saudi Arabia, and yet they RFC represents them as being in the same civilization slot, namely Arabia. It's merely a matter of convenience: unlike Europa Universalis, Civ IV has a limited number of civilization slots. So, rather than leaving the "Rome" slot unusued in the 600AD scenario, I would recycle it as Italy.
I think that most people, especially Italians, are against taking Rome to represent Italy for a variety of secondary reasons that have nothing to do with gameplay mechanics. Theres a mixture of regional pride (somebody from Milan, from example, may not like being referred to as Roman), political feelings (nowadays, thinking of modern Italy as the successor of the Roman Empire may have fascist connotations), and some sense of historical identity (any Italian will say that Italy is not just about the Roman Empire, and that they have achieved so much in the Renaissance...). These are all valid reasons for resisting the identification of Italy with ancient Rome, but not for objecting to Romes re-spwaning in the game as Italy. After all, that is what dynamic names are for.
Note: In current RFC, Rome gets the dynamic name New Roman Empire when running the police state civic. Thats a clear reference to Mussolinis dream to create what he called nuovo impero romano. If police-state Rome civic can be regarded as Fascist Italy, I dont see why (post-industrial) universal-suffrage Rome cannot be regarded as contemporary Italy.