Olleus
Deity
Of course, we can probably never agree if you wish to balance the game around 'the single-player experience'. This is precisely one of the biggest failings of Civ V: It's 99% a single-player game, but because of the AI's ineptitude there's a gap between the way the game is balanced and the way it actually plays. I've just explained how the game is actually balanced, and even if it's mostly theoretical because the AI can't live up to these rules, this is how things were actually intended by Firaxis. Other than Honor, there are a number of other prominent examples of the same, such as the Japanese Zero which gets mocked for being a bad unique unit despite the reality being that it's quite powerful - just this power mostly doesn't apply against the AI where it isn't needed. You can mod the game to suit your tastes and perhaps create a better single-player balance, but I'd hate to see Firaxis cave in and balance the game with the abysmal AI in mind rather than keep the current strong balance and improve the AI instead.
I have some quibbles with your other points, but this I agree whole heartedly with. The best way to balance honour is to make the AI stronger at war so you need the military bonuses to conquer them. The problem is that this is an incredibly hard thing to do. To hard for anything but a competent and dedicated Firaxis or a huge group of modders. What I'd like, and I wager many others, is a slight hack which slightly changes honour to make it useful in the current AI environment.