The more I play Civ V, the more 1UPT reminds me of this:
Great point!

You forgot to make the chess board and pieces 3-D with crazy animations that bog down our computers, and so zoomed in that you can't see the whole board! Sigh, all things that we also don't need for a strategy game.
Overall, a lot of good points here on both sides. I'm still trying to decide if I like C3C or CIVWarlord better..., but I think C3C handled the SoD best. You could always use the block and bypass method at a fortress (strong defensive units defending in a fortress, with arty bombarding to weaken the enemy SoD). Your offensive forces could then bypass it, or destroy what's left of it...just as armies sometimes did in history...besides, unless you were fighting on pangea for CivsIII and IV, a good navy (and later air force) could stop SoD's in their tracks anyway, or at least nullify their threat to your continent.
IMO, the best solution is to either limit the tiles to 5 units per hex (ciV), or 8 units per square (CivIII and IV). This way, a stack of 8 or 5 can fan out to the neighboring tiles, but still be consolidated on to one.
The points about HoI3 are enlightening (big fan of HoI2 myself)...making a simple formula that degrades the combat power of units who are attacked from multiple tiles in one turn, furthermore, the "combined arms bonus" in HoI2 could be transferred to the Civ series.
Overall, adding these three things: 1)realistic (which CiV is not) stacking at strategic level, 2)Envelopment bonuses/penalties, and 3)Combined Arms bonus, would be the best solution.
On a side note, although Civ4 had some awesome promotions over civ3c, and Civ5 has potential (after fixing crashes, bugs, and the above problems), I think Civ3conquests had the best graphics/sprites, and view for the series...if all of these fixes could be applied to a mod of civ3conquests, I think I'd rarely ever play 4 or 5 again. I'm not great at mod-ing though...anyone think they could make this mod for Civ3C?