True. Also, plagues can hit "randomly" which adds another negative. If the plague happens to decimate the AI, it gives the human player an unfair boost. If the plague hits the player, it gives the player an unfair penalty.
The only way plagues could work is if they were tied to a health mechanic so that it was less random. If players neglected to build health buildings they would be more likely to get disease in that city. That disease could spread to nearby cities that are connected by roads or trade routes. Also, plagues would need to be nerfed so that they were not debilitating. Maybe you just lose 1-2 population for 1 turn in the affected city. I think that would hurt but not be crippling.
They have now tracked Plague (Bubonic) back to the first "Indo-European" (pastoral) migrations into Europe, people who brought that and other animal-sourced epidemics with them and devastated the existing agricultural communities who had no immunities built up. That makes "Epidemic" or Pandemic an historical fact going back to nominal Start of Game in 4000 BCE.
The trick is to have such a thing but not have it dominate your progress through the game.
As long as Civ persists in its Unrelenting Progress model of Civilization, that's going to be very tricky. "Rise and Fall' or even real "Dark Ages" have never worked in Civ because any set-back to the progress of your Civilization is seen as crippling given the unrelenting, constant pressure to stay even r ahead of all the other human or AI 'players'.
But I think you've touched on the answer, which is:
1. Have something the Player can do to alleviate the effects of Plague - as stated, a set of 'Health' structures that can be built: Sewer Systems (
Cloaca Maxima as a National Wonder?), Water Systems (charcoal was being used as a water purifying agent as far back as the early Classical Era in the Phoenician cities), even primitive medicine is better than no medicine at all, and herbal medicine compendiums were being written in China prior to 1000 BCE - add in the teaching and writing of Hippocrates, Galen, Dioscorides, and there are ample examples of Classical Medicine that could be used as a mechanic to alleviate the worst effects of an Epidemic.
2. "Tone Down" the worst effects of Pre-Germ-Theory Pandemics. Instead of losing up to 1/3 - 1/2 your population in a turn or two, limit the Worst Cases and perhaps make the effects only apply to individual cities instead of spreading within a single turn from one end of the continent to the other (Plague of Justinian seems to have spread from the British Isles to India within 5 years, which in game terms means Instant Catastrophic Population Loss, which would usually also equal Rage Quit And Stuff This %$#@& Game)
By making the effects at least start in individual cities, that would also allow the effects to be directly related to Events - have a lot of long-distance Trade Routes = More Risk of Plague, but also More Gold coming in: you takes the good with the bad in the game. IF the epidemic spreads more slowly than IRL, as in a city at a time over several turns, that allows some Player Intervention which alone makes the mechanic easier to live with.
Formal Quarantine wasn't "invented" until around 1600 CE by Venice, but people stopping traveling to infected cities or cutting off trade with a city to avoid the Plague on an individual basis was much older, so you could, basically, trade a temporary Economic Hit to avoid a Population Hit - again, giving the gamer some means of dealing with the epidemic event, even if only partially.
Other potentially interesting effects of Plague might be to have epidemics at random strike down Great People (short of the Civ Leader, of course) or even Governors - you'd lose the Governor's effects for X turns until a 'new' one is trained.
Losing a Great Person completely could be balanced by the better chance (maybe the Only Chance in the game) of getting Great People generated by the Plague Conditions - that might be how you get, for instance, a Boccaccio's
Decameron or Camus'
The Plague Great Works, or a Florence Nightingale or Alexander Fleming Great Person . . .