The correct answer is maybe. You can change some things, but not all things. I made some xml changes during my first, learning, game and some things worked and some didn't. Generally, costs, thresholds, multipliers, yields can be changed and take effect on the next reload. Can't really think of what didn't. Changes are not retroactive, though. Changed wagons from 2 to 3 cargo and SOL from strength 8 to 10 and all units produced after the changes had it, but any units before were as before.
Don't really know where to look for city flipping, but I suspect it is in the savedgame file and not easy to change; probably by intention. Doesn't seem like a good idea to be changing things like that, or victory conditions, during the game. Too much chance to really screw up the game.