First off, yes, the blue circles are useless as far as suggestions for tile improvements are concerned. Simply learn what tiles should be improved with what and ignore the game's shaky suggestions. When
settling they can indicate hidden resources though, say when there's a blue circle in a conspicuously empty area of land there's a reasonable chance there's something like Oil or Uranium around, but it's not a guarantee. Take it as a hint, but don't sacrifice good city locations for it. Especially in the BCs.
Once you have every tile within every city's BFC improved and everything hooked up with roads, you can set your workers to Automated and let them run wild. Just
make sure the options for workers to ignore forests and old improvements is set in the options. They
will farm over your existing towns and put cottages on your existing farms otherwise. Automated workers are dumber than bricks like that, but if an AI spy takes out a Plantation they will immediately rush out to replace it, so it saves you a bit of micro. There's a command to cancel the automation command for all automated workers at once...but I seem to have misplaced it

. Select one automated worker and Control+Left click on the command to Cancel Automation I think, but don't quote me on that.