That's funny right there (Loyalty system)

[ShakaKhan]

After the initial scouting of a map, I find that I have a pretty good-sized peninsula that I can cut off from the rest of the civs, and on my peninsula and safe from the other civs I got Stockholm for artist-class GPPs and science, Nan Midol for tons of culture, and Zanzibar for amenities and cash flow. So I figure I'm going for a culture victory. The X-factor is a neighboring civ, America - Washington is placed at a bottlenecking chokepoint that cuts off my peninisula. Also, Genghis, who I don't want to deal with in a tourism game, is on the other side of America so they serve as a buffer.

So I expand towards Washington, and one city that's adjacent to Washington gets its population really high through Magnus-chopping marshes and rainforests and has a couple of farm triangles, and then I prioritize expanding along the western coast (I'm on the eastern side of the map) to prevent embarked settling. America declares war, I take Washington and leave him with a 2 rubbish cities between Washington and the Mongols. I build up Washington to a degree, and that other city has really high population.

For...
the...
entire...
remainder...
of...
the...
game...

Genghis declares on the remnants of America -> he takes the two rubbish cities -> the loyalty pressure from my high pop cities make them revolt in a few turns (faster than his units can heal) -> I refuse to take them and leave them as free cities -> Genghis takes them again and they revolt again.... rinse and repeat until I win my culture victory.

This system needs a rework.

 

[MooFreaky]

I don't think it needs a rework. Situations like this are extremely specific, and any system will have some issue that are "exploitable" under very specific circumstances.
Plus as you were playing for culture you had that section of your empire built to take advantage of your loyalty. How is that more of a system that needs reworking than just building an army and crushing your enemies? It's on of the few times that culture/loyalty was able to overcome the military option.

If anything these type of situations need to be more frequent (but perhaps more balanced, to make them counterable) to make other play-styles more in line with the power of pure military.

 

[lotrmith]

Map size? Difficulty setting?
You outplayed the AI.

You have the options of upping the difficulty, changing your strategies to be less exploitative of a system you think is too exploitable, or playing against humans.