Knoedel, I feel like while the concept of the mod you've mentioned is pretty cool, it's kinda missing a key point about the Civ games, which is that happiness/unhappiness is actually referring to how content, or dissentious, a civilisation's citizens are. Maybe I'm wrong but this is always how I've interpreted it - It doesn't refer to happiness in the sense of a feeling of well being or satisfaction with one's life.
I also think the happiness system in the Civ games is an important illustration of how civilisations throughout history kept the support of their populace with luxuries, public works, etc.
Gross National Happiness is a flawed concept to me in general, because of it's implications eg: "Our country is great, because our people are happy, even though their access to basic human rights is limited." (I'm pretty sure the whole idea of GNH was created by a King of Bhutan to show how good his (then) incredibly poor country was, which essentially seems like typical propaganda).
I think historically speaking, there isn't much evidence to say that a state with a happy population is any more successful than one with a less happy population, so long as that population is generally supportive of the ruling class/system of government (except that perhaps happy people are more productive? idk). Or at least, there are other far more important factors.
Morally, I personally feel that happiness is important, but the Civ games aren't too concerned with moralising history.
I don't know, sorry for this incoherent ramble but I just started thinking about this and you did ask for people's ideas.. maybe I'm missing the point
