Suddenly, my trade reputation is ruined without me having done anything. One civ declared war on me and there was a flurry of AI vs AI declarations. Maybe something happened there with the lux trades through no fault of my own.
You might have been supplying a luxury or resource to some AI. But, because of the consequences of the war declaration you could no longer supply it to them. This can easily happen before Navigation (or if you have no harbors, I suppose). Suppose China lies between you and the Zulu. Now, you can trade luxuries or resources with the Zulu, because of roads in China's territory. But, if you end up at war with China, then the supply router between you and any trade route through roads to the Zulu no longer works. Their cultural borders will also block potential trade routes along the coast. So, one of you has failed to fulfill the responsibility of supplying the luxury or resource, because of the war between you and China (or because of the war between China and the Zulu).
Once Navigation rolls around that sort of scenario becomes much less likely, if not impossible, to happen, because of harbors. We could think of merchants traveling on boats over the ocean (even on a pangea map) instead of over roads on land or moving along a coast. Magnetism would have the same effect, if it ever appeared sooner than Navigation.
You don't like what happened to you. But, the mechanic can get leveraged to work the other way around (and some of us have done this before... a good number of the games in the Hall of Fame on Sid level do). Basically, if an AI supplies you with a resource or luxury only, but they can't supply it for some reason to your empire, then you don't take a reputation hit. Because, as the supplier, the AI had the responsibility to fulfill the trade route. It turns out that if an AI can't supply a luxury or resource to your empire's capital, that automatically cancels any deal, and if you aren't supplying them with a resource or luxury also, you won't take a reputation hit. But, your empire gets to keep any hard goods like gold, technology, or maps that got included in the deal.
I kind of have the other view of that mechanic. It has a sort of brilliance, because it enables one to get everything that the AI has over enough time, even if one's empire hardly has anything of it's own to supply. The bigger downside that I see comes as that it makes the espionage system of trying to steal technologies useless in comparison. Though, if one doesn't want to pillage roads, that espionage system could still have it's uses.