I am playing the aztecs, so it was no problem to found a religion as the first and spread it relative fast on the continent. The civilization placement was a bit weird, 5 were spread on a big continent, 2 others on a contintent around 60% of the size and another civ with a own continent around 30% of the size. 2 of my half beaten neighbours founded a religion, which i conquered and annihilated with an inquisitor. So all my cites have my religion, spending me 1 happiness for every 2 cities and authority also gives me 1 happiness for every garrisoned unit in a city. Additionally I have 3 monopolies with +5 to happiness.
Additionally, the last independent religion is founded by the sole civilization, which make no attempts to spread it to the continent with 2 other civs, which are still 80% pantheon believers (1100AD), even they only have to cross 8-12 coast tiles to reach these.
As you can see, I have no problem with unhappiness.
The problem is, I get more and more puppets with 10+ citizens, which have only 8-9 tiles to work, cause they only produce food or money but no culture buildings. And the culture bonus for a garrisioned unit (authority tree) is reduced from 2 to 1 due to the -25% penalty.
At the moment, puppet cities are uncontrollable cities, improving the research cost by 10% like every city, never produce research like these due to its -25% penalty. It doesnt increase the social policy cost, but it also do nothing to produce more culture (which would be also be reduced b 25%). Its like they only build a third of the available buildings and produce money, even you already generating more then 250+ gold per turn.
At the moment, all you get is population and some gold production and the ability to deny some place to settle for enemies......