1) It seems that Turkish cities are auto-razed when they are size 1 because they don't start with any culture. Quite a pain everytime that I autorazed one to manually create a new settler using save game editors. Otherwise, the entire turkish peninsula and Persia would have been empty.
Autorazing is a Civ3 problem - I'd recommend Skyer2's NoRaze patch, but it requires a bit of searching since it works only with No-CD exe. Adding 10 culture could help the player a bit but it won't stop the AI from razing.
Note that the actual mod has settlers - you're playing a scenario that has historically placed cities instead.
4) What's up with the Aegan sailor? Is it a flavor unit or a Unique Disadvantage? Its only difference with the normal Man-at-arm is its higher cost. Honestly, when I compare a 4/2 infantry unit with a 50 shield cost against a 4/3 cavalry unit with a 60 shield cost (cataphract), I don't bother building the first. My entire army was centered on the cataphract and later on the pronoiar because the only offensive infantry unit the Byzantine can build is too costly and becomes obsolete with the coming of the late knight.
It's a disadvantage of sorts - the real disadvantage is lack of Crusader units, which are 5/3+amphib. Aegean Sailor is there to make sure Byzantium has some kind of amphibious unit early in the game.
5) I really appreciated the vassal system. However, I felt that the empire gov might have too many vassal. In my game, I rarely saw a city with more than 4 shield lost due to corruption. Eight small wonders adding to your optimal number of cities+communal corruption rank+free town hall in all cities (Magna Carta wonder) = money whore. In fact, all the other AI adopted it except when they were down to 2-3 cities. They then went into City-state gov.
Feudalism has even more vassals IIRC. What difficulty are you playing on ? I mean, if you already have 8 empires capture and control half of the map, the game is pretty much over

Also, vassals have no effect on the AI choice. The biggest factors are war/peace (civs at war will prefer Empire) and number of cities.
6) If you are Byzantium, you're the only one allowed spy missions. It's really a huge advantage when you have a large treasury. For example, I have 32000 gold running 500-1000 gpt and everyone is in awe of my culture. Every time a city gets captured, I run a couple of propaganda mission until the city flips. Sure, I did spend 11 X 512 gold on Barcelona until it flipped, but I was unlucky that time. Beside, it didn't really hurt my treasury. That's how I conquered all of Southern France and the spanish coast. I ally with a strong player against a weak one, he takes their city, I flip them and wage war on another front. If the AI could have espionnage in the Late Middle Age period, that would still leave an entire age for Byzantium to play mischief.
I don't really see a problem here. It's not like the AI having access to Espionage would stop you from doing the same thing. Also, it's easy to have 32000 gold when you control half of the map

Byzantium in particular is one of the easiest civs to play in 11c scenario, it just starts at the peak of its medieval power. For this particular scenario, either try it on Emperor level, or try a poorer civ - an extreme example would be Venice, which starts with only 2 cities.
7) Small mistake in the pedia. It isn't written that Byzantium can't build Hospitalleers and Templar Knights even if it has the Holy Land ressource.
It's listed under disadvantages in Byzantium's pedia (Templars are at least, though Hospitallers are a flavor version).
8) In the pedia description of the Sipahi, it says its a flavor unit for eastern civs. It seems that doesn't include Byzantium as I only got access to the Late Knight. Is that correct?
Sipahi was an Ottoman unit. I guess I could've been clearer saying "Middle Eastern" as it refers to Ottoman Empire and the Muslim states that became part of it.
10) I was a bit surprized by the Renaissance Age. No new building except the artist guild which is a replacement for the tournament builsing. If you do a new patch, I suggest looking into ways of making 3-4 new building available in the last age. Perhaps a replacement for the caravanserai which expires with the New World tech. And a foundry which auto-produce cannons. It would make that age something more than just wonder grabbing.
Yeah I agree Renaissance is a bit lacking though it makes that up with many wonders. We couldn't think of anything good (I'd rather not have auto-producing non-wonder buildings to avoid flooding).
Overrall, I really liked the mod

. I won a VP victory because I was tired of waging wars. I could have easily reached the domination victory had I been more agressive. Next game, I'll play an european civ to wage a crusade!
Thanks, though you didn't play the mod actually, but one of the scenarios for it. The actual mod can be played on random map, or clean maps of Europe, and offers a vastly different experience, with settlers etc.
I didn't quote all the balance issues you mentioned but they're generally related to this specific scenario, which is not meant to be balanced for all civs.