I like this idea. I don't think the AI is generally aggressive enough to be able to take all their cities back, but at least if they have a chance to stay alive (but still considerably weakened) more modern civs could be represented, and ideally stay in their homeland if they got too land hungry.Mabye theres a way to compromise. Mabye collapsed civs could have a set amount of turns to become more stable before their capital collapses.
Maybe just make new leaders to represent the modern times for these nations and add some new dynamic names? (like German Greater Reich and Union of Soviet Socialist Republics).
Dynamic names are already in the game and as far as I'm aware are well updated to modern times, unless they don't follow their intended course of history (Russian Empire becoming the Soviet Union, etc.) in which case it wouldn't make much sense anyway.
People have proposed new leaders before and while I do like the idea, I really miss leaderheads changing with the eras in Civ3, the problem I have with it is that there are a lot of fan made leaderheads that frankly don't compare to the quality of the originals. It may not seem important, but considering that this is a purely aesthetic issue, I'd much rather have diplomacy with Montezuma in 1990 than deal with palette swaps of FDR leading every country.
Still, I have seen some pretty impressive modern leaderheads (namely Castro and Mussolini) so I may be acting a bit too skeptically. If someone were able to make nice and original looking leaderheads for people like Ali Khamenei and Saddam Hussein for Persia and Babylon, it may actually be pretty cool.