[I played the REX phase of 2 test games with the same settings and in both I could get to 12 cities until there was no more room to settle. 2 settler factories is overkill for 12 cities. So we do not need 2 settler factories in this game.]
Alright... I guess you don't plan to raze and replace if you warmonger. I don't know how well this works out on demi-god, as I don't raze or try to capture... but I will say that I know the AIs have a darn good bit of culture on Demi-God (the 70% production rate AND the extra settler especially start helps), so if you capture a city and it flips I wouldn't feel surprised.
[If ansar is right and there are silks in the fog, I'd still prefer start 2 over 3.]
I haven't a clue how he guessed this. I don't know how ansar thinks seafaring makes you start coastal. They don't list that in the civilopedia, and I feel pretty sure you won't get the commerce bonus for founding a city on the lake. Maybe we have a lake, maybe a coast there... either way you can't figure this out, so you'd want to move the settler two turns north to ensure it in start 2. In start 3 you move one turn directly west and you've got it for sure.
Also, in start 3 you can get the capital up to full strength faster than you can in start 2. Maybe that doesn't matter for building settlers but if you want to build anything but workers after settlers, and possibly even after workers, it might. What... mining takes 6 turns in despotism for the Dutch, correct? Without roading anything this means that it takes 24 worker turns for the cow start (start 3), and 30 turns for the worker start to mine all the tiles you'll use at size 5 for the wheat start (start 2) (not necessary for settler's only I suppose... but I'd consider this). With roads... I usually road and mine or mine and road before my inital worker leaves a square... it'll take 36 turns for the worker to complete the cow start and 45 turns for the wheat start, because you have the whale lying out there. I'll take those 9 turns for my worker. 36 turns to get a combo factory up and running also seems like you'll have some warrior and settler combos in 4 turns going by settler 6 (that's probably generous actually... as you get 6 settlers in 24 turns... 12 for the granary and growth to size 5... WAY too fast... probably more like settler 2, 3, or 4... lots of early escorts or barbarian hunters or pre-swordsman).
Also, even if you don't *need* a second settler factory, you might want another town to build a settler or two to found those towns faster. If you irrigate instead of mining the cows, the second town might make an excellent choice for this. Although, maybe the combo factory sounds better. Of course, there's more...
For the cow start (start 3) after you've built all your settlers, especially if you have iron and want to warmonger or have some strong units lying around if you feel you need them, you can build barracks in the cow capital in 4 turns, no sweat. With the wheat start you'd have 8 OR 9 shields if you have another bonus grassland lying around. With 9 shields at size 5, you'll get 2 extra shields as you grow to size 5, so you'll draw even with the cow start... but if you have 8 shields those barracks will take you 5 turns to build. If you want a swordsman instead, it'll take a turn longer also if you have 8 shields. We don't know if we have another bonus grassland lying around.
Of course, if you want the Great Library or *any* wonders later on... starts like start 3 I think win hands down. More interestingly, with start 3 you can use the cow immediately. For the Dutch this means warrior 1 comes online at the same time your capital grows to size 2. You'll have to choose between growth and production and manange it more carefully as your capital grows with start 3 to maximize the situation.
So, to recap start 2 requires 9 or so more worker turns to get to full strength at size 5 (which you'll want eventually), slower production of early warriors and/or the granary, start 2 doesn't have a 4 turn warrior-settler factory combo possibility, start 3 has this as an actuality by settler 2 or 3 I'd say, start 2's capital starts a turn later, start 3 can probably more easily have town 2 produce a settler than start 2 if you want to irrigate and forego the combo factory, start 3 can produce wonders more quickly than start 2, start 3 assuredly will produce barracks or an early swordsman (just upgrade the warriors from the settler-factory combo in settlers 4-12 or whatever) in 4 or 3 turns once it finishes its last settler, if that's what you want. Start 2 MAY do this, while with start 3 such comes as assured. Start 3 comes as easier to micromanage efficiently. Do you want to forego all those actualities for an extra river, a hut which I'd guess will give you maps as huts get worse as you move up in general, one less commerce, and a *possible* luxury? I wouldn't... but it's your game man.
[If the point of the strategy is not building a lot of military in favour of other improvements, then this counts as a failure I'm afraid.]
No, that's not exactly the point of the strategy. I quit my game because I had some gallic swordsman and like 6 or 7 knights... not enough to fight a war with a direct neighbor on Deity without losing some cities. I might still have won the game, since I had MAs with everyone and the Mongols started coming for Shaka fairly hardcore with medieval infantry and such and the Zulus had just gotten iron a few turns earlier, which I pillaged... but that meant the city or two I lost would fall to the Mongols.
"In the 2 test games, I got to the end of REX without wars in 1 game, in the other the stupid Zulu declared"
Did you have Rights of Passage signed and have their attitudes at polite? If not, that's probably what you needed to do.
. So I want to try an SG at demigod level. Any monarch/emperor level or stronger players are welcome to join. 
) 
Oh, and some luxes can appear on grass, such as wines.
