choxorn, I think I wrote in my turnlog that I deliberately set all the citizens in Hlobane 2 to taxmen. I suppose I didn't explain clearly enough why I did that, but yes, the reason is very much what Andronicus has said: the city was going to starve anyway, and it was so corrupt that the only way it would be useful was to make it a specialist farm. You do this by irrigating and railroading every tile so that it has a minimal number of citizens harvesting food, with the rest of them as scientists or taxmen.
I would not have rush built a temple there; the city will likely flip back to pink in a few turns and we would have just wasted a bunch of gold. The lighthouse does not give us culture, and we won't get any good tiles with cultural expansion. If we do get expansion, I recommend that the temple be sold immediately.
Regarding nationalism: there are extremely few situations where I would opt to self-research nationalism. In fact, I've probably only done it once or twice excluding always war games and the nationalist variant, where researching nationalism is required as a handicap to the human player. Let's just look at what nationalism gives us, and you'll see why it's not worth it:
1. Riflemen. Personally I find this to be the single most annoying unit in the game, as the AI loves to build them, yet they're no good for us. Attack strength of 2 is worthless, and if you need them for defense it probably means you don't have enough offensive units. Infantry are only 2 techs away and they are far, far better at both defense and offense. Usually the only way I get riflemen is by upgrading muskets, pikes, spears, etc, and even then I'd much rather upgrade to infantry.
2. Mutual protection pacts & trade embargoes. This is totally pointless, as we can negotiate these agreements with the AI when they get nationalism; we do not need the tech ourselves for doing that.
3. Drafting citizens. I've only done this in a few games, and I think I also lost those. This is only necessary when you are in really awful shape, getting pounded by the AI - clearly not the situation here.
4. Mobilization. OK, I'll admit that this is a good reason to get the tech sometimes, and I've used it occasionally as well. But in our case, it is no good - we do not need huge numbers of units as we will probably try to avoid wars, and the culture penalty is going to hurt us as it makes cities more likely to flip to the AI.
5. Opens up the communism and espionage techs. I think this is often the only reason I actually bother to get nationalism at all in most of my games. But since the AI almost always researches nationalism first when they reach the Industrial Age, I can usually count on trading with them for it. And since we are going for diplomatic victory, it becomes even more important that we do not waste time with optional techs during the IA (except maybe sanitation) because it will delay our research for fission.
As for some of the other impovements - I'll admit that I build barracks in distant cities sometimes, just for the sake of having a place to heal and upgrade in times of war. But generally this is negated after rails come along.
Courthouses do have their place in this game, but they should be used carefully and are probably not going to be a priority. If a city is getting one shield or gold per turn and will likely only get up to 2 or 3 of them with a courthouse, it's not worth it - just let it build workers instead.
Colosseums, in my opinion, are the worst of the happiness improvements. They cost 2 gold in upkeep and only produce 2 happy faces. Cathedrals are very marginally worthwhile, because they produce 3 happy faces at the cost of 2 gold in upkeep, and it would take 3 gold to do the same with the lux slider. Temples are only worthwhile for cheap culture or to make cathedrals available. Because of all this effort involved, in non-cultural games I try to avoid building these at all and simply the lux slider. In this game, culture is important, but even so, colosseums are at the bottom of the list of cultural buildings.
Finally, don't be afraid to leave some cities undefended. Unless you are in monarchy or communism, where you can use units as military police, there is no reason to keep a garrison in every city, and especially not in cities deep in your territory that are not at all vulnerable to AI attack. Yes, putting units there will help prevent flips, but it also means that you lose more units if that city decides to flip anyway - so you'll have to make that call carefully.
So I hope as you become more experienced with Civ 3, you'll realize that there are certain techs that are generally not worth researching yourself because they can be acquired from the AI quite easily. For me, this usually means bronze working, monotheism, theology, astronomy, and nationalism. And I hope you also learn from this how to deal with distant, corrupt cities.
Now, with all that said, it seems like I'll be rather busy for the next few days, so may someone else please continue this game while I get hounded by miscellaneous RL matters...