We may disagree on what productive city means, I cannot see a city in Cyprus with just two land tiles being productive. It is a below average city in RFC Europe where the island has double the land tiles. With only two you will likely not get much out of it. Moreover it will likely be within the cultural borders of whoever occupies Damascus or the Levant in general. I cannot wholeheartedly disagree with your comment on increasing the overall difficulty by throwing some suboptimal cities. Let me do some testing with Monarch/Normal and see where we are with Italy right now
I don't think we actually disagree. I'm not going to sit here and pretend that a Cyprus city is a
good city after the early Classical Era, but compared to other UHV-mandatory settles (e.g. many of the Portugal-UHV 1-tile islands, some of the Ethiopian Incense cities, Russian Siberian cities) a city that comes with a free 5/6 Hammer (I can't remember the exact bonus for settling on the Copper Plains Hill) while surrounded with 2F2C coast tiles if grown is not bad. IMO a non-Core city needs Production first and foremost as any population it adds is going to a minus to stability anyways, so the Cyprus city having 'okay' built-in production at least lets it pump out transports, workers, or city defenders in a sort of reasonable time, or just build Gold and offset its maintenance. In contrast, a Cretan or Mallorca city is just straight garbage to your civ's engine and will never be good as it lacks production while still being non-Core.
On the difficulty end, I don't really think the Italy game
needs to be harder, though I find it on the easy end after the first 30ish turns and the post-UHV 1/2 game is a bit boring. I think that has more to do with the relative weakness of the southern Europeans/Ottomans when I last played --- a player Italy just winds up as a top dog. I also personally feel that easier UHVs are fine in general as there are already plenty of hard UHVs.
I think instead of rigidly requiring control over certain regions, it would be more flexible to set UHv3 to have a certain proportion of Mediterranean territory during the Maritime Republic period, and then have a higher proportion of Mediterranean territory after Italian unification(In this way, players can consider expansion directions based on the different situations in each game, especially for civilizations like Italy, which have relatively weak military capabilities)
I think it's up to Leoreth's philosophy on crafting the UHV (if he even thinks it needs adjustment), but my suggestion for fixed settles on the first half of UHV 3 is to have rigidity and therefore difficulty. The second half / current goal is already very flexible (which IMO is good since it accounts for late game uncertainties), but sometimes goals benefit from being fixed and requiring the player to do certain things. The risk of rigid goals is of course railroading the player, or creating an impossible goal.
My last 2 cents on this suggestion is to re-iterate that I suggested the fixed locations with those certain options so as to promote (further) tension/interaction with the Byzantines and Ottomans. There is already some organic tension between a player Italy and those civs because of the proximity, but explicitly requiring the player to engage with the Anatolian power helps, in my view, to create a historical experience for the player reflective of a part of medieval and Renaissance Italy's political interactions.