We're about to finish a settler in Karakorum. Let's send him to get the gems, gold and rice in the SE, then forget settling for a while. If we occupy all of Saladin's cities, that'll be 8 settlements we have to keep track of. That's plenty for this stage in the game, particularly as Hatty has only four.
Incidentally, if we decide to get our hands on the silver, 2 squares due west of the iron would probably be the best location.
It just occurred to me; it would be helpful to know the makeup of Saladin's army. What would be the diplomatic implications of signing Open Borders with him? Alternatively, what do we already know?