(Actually I don't play RFC DoC now. I play different mods from time to time, and played RFC DoC sometimes. But I decided to post because I agree with many your ideas.)
(I can't use more than 30 food/hammer/health icons in a post? Inconvenient.)
1. Watermills & workshops. I totally agree with your intent on watermills and workshops. But +1h for watermill and +1c with engineering is still too little.
Real world (correct me if I'm wrong): watermills were very important, they were used for grain grinding, paper production, mining, metal working, in Roman Empire there were factory-like watermill complexes. Workshops existed, but manual labor was very unproductive for a long time - also before factories "cottage system" was used frequently (working from home, not in workshop). During early industrial revolution there were boom of watermills in Britain, while early steam engines were too expensive and inefficient for workshops. Only with appearance of efficient centralized electricity generation + electric motors real mass industrialization started and watermills became non-important.
Also watermills have special requirements, they can't be built in every tile anyway, so they deserve strong bonuses.
If I make a mod (for BtS), watermills will be +1

+1

, buildable in forests and also on hills, +1

from RP, but no other tech bonuses. And workshops will be probably replaced by "factory town" improvement (something like -1f+2h, req steam power, +1h with RR, +1h with AL).
2. Units.
2.1. I never liked that axeman is a main ancient unit in Civ4, while in reality main units were spears and archers. I agree, bonus vs melee should be removed. Even nerfing them too much is better (for realism) than default situation.
2.2. Bonus vs mounted. I think, spearmen and pikemen should have bonus vs chariots, war elephants and knights, but not against horse archers and cuirassiers. Archers and crossbows should have bonus against horse archers, but not vs other cavalry. And I totally agree with bonus vs mounted for machine guns - it should be even bigger, +50%. Weren't machine guns the end of cavalry?
2.3. Amphibious catapults and cannons - I agree, they shouldn't have penalties attacking across river, but giving them "Amphibious" promo also means that you they can attack cities or stacks from ships without penalties, doesn't it?
3. Units and metals.
I considered maybe removing hard resource requirements for melee units while increasing their cost and adding a modifier so they get built faster with Copper/Iron.
If I make a mod, I will remove iron resource completely (may be, copper too). Units like spears, knights, cannons will not require any metals anymore, mines will be +1

, +1

with IW instead of +2

.
Realism: iron is very common and has too many different economic and military applications. And if iron is a special resource, what's even mined in "regular" mines?
Gameplay: currently metals are too important, civs are too weak without metals, conquering metals without metals is very hard. And giving metals to everybody defeats purpose of having them as a resource, doesn't it? Iron to all!
4. +food. Personally I strongly dislike idea of flat +food for granaries and smokehouses. Why?
0) it's like in Civ5; 1) 1 food is better than 1 health (and even better with +% food), you may just keep

bonus. 2) it's a road to ICS - the more flat per city bonuses there are, the more attractive ICS is; if city tile is the most productive tile, you should have more city tiles. 3) it's unrealistic, it's magic. Realistic buildings are multipliers, increasing labor productivity. But buildings with flat per city bonus provide magical food from nowhere, which can't be replicated again in same city, only in another one.
If I make a mod I will avoid flat +

/

/

/

/

bonuses for regular buildings

culture: is OK, wonders are OK). And will make city tile 1/1/0.
5. +% food. They are OK, but don't forget that food bonuses are strong and 1 food > 1 health. +5% food sounds weak, but it means +1 food in size 10 city and +2 food in size 20 city (and that's better than aqueduct or PT for size 20 city). +20% food from supermarkets is +8 food at size 20. Best health building ever. That's like national park in RoF DoC. Be careful with food bonuses. I would give supermarket only +10% food with power.
6. Food and health.
If you want realism, most food resources shouldn't give any

at all, while health buildings/techs (aqueducts, hospitals, PT) should give more

instead. Default BtS health system is completely unrealistic.
Adding corn, rice, sugar or pork to your diet, eating many types of grain and meat doesn't make you healthier. Fish is healthy, true, but people ate fish from local seas and rivers in areas which don't have fish resource. Europeans imported silks and spices from the East, not rice and crabs. And what was really important for human health historically were sanitation, sewers, vaccination, medicine, antibiotics etc.
If I make a mod, I will remove

from most food resources completely. Only very few like tea and bananas will provide

. Sugar will reduce health (2

1

). And I will make health buildings better. Aqueduct: +4

. Sewer system (req engineering?): +4

. Hospital: +4

, +2

with welfare state. PT/metro: +4

, +2

with SP/planned. Etc. May be, also will make manufactured health resources like medical drugs, which you can sell or gift to backward nations. It will work fine for gameplay, I think, food tiles are already strong even without

, and also it would help smaller nations, which don't have many resources. That's how I would make it.
7. "Capitalism" & trade - I think, bonus

from trade is more fitting for free market economic system (free trade in food, no tariffs on food imports), rather then for "capitalism" labor system (which, I assume, represents wage labor without welfare state, though "industrialism" represents same thing).