@Sickman. Essentially yes-Capacity Points are an abstraction of the entire rail infrastructure and rolling stock of the entire nation. To do it on a city by city basis-IMO-would simply add too much micromanagement, wheras this system is one the player doesn't even really have to think too much about (i.e. he can either move a unit on rail, or he is out of capacity-in which case the player will be informed-and can possibly wait to move said unit next turn).
Also, having Limited Capacity allows Railroads to retain their unlimited movement-which is good from the point of view of realism and keeping out unneeded micromanagement.
One of the other benefits of this system is, because CP's are based more on city size-and tech level-than on the sheer number of cities, it emphasises Quality over Quantity (i.e. reduces the Bigger=Better phenomenon).
Also, if you also incorporate a cost for infrastructure, like rail and roads, then it allows compact nations with a few very large cities to maintain lots more CP's-at lower cost-than a sprawling nation consisting of a dozen or more smaller cities.
As for how much of your gpt you lose per CP used, I feel it should be based on two key factors-the amount of money in the national treasury, and the total number of CP's the nation has. I confess though, that I have yet to come up with a well balanced system to accurately reflect this cost. My concern is that if you have more CP's, then you stand to lose less per unit moved (unless you have a large treasury) which I feel unfairly benefits cities with a bigger capacity (though you guys might think it perfectly fair).
To explain, my original thought was, if you had a city with 800gold in its treasury, and a total of 20 Capacity Points, then each CP used would cost (1/20*800) gpt. In this case, each CP used would cost 40gpt. If the nation had 1000gold, then each CP would cost 50gpt. If the nation with 800 gold had 40CP's, however, then each CP used would cost only 20gpt.
As I said, though, I am not entirely sure that is a fair system, though it does reward people who invest sufficient time and money into both their underlying infrastructure, their transportation technology and developing their connected cities. It also means that those with the bigger economies have potentially the most to lose from disrupting their civilian economies in order to go to war-as they might quickly find themselves in a deficit situation if they try and move too many units in one hit.
Anyway, sorry for the convoluted post, but I hope it makes sense.
Yours,
Aussie_Lurker.