If I recalc and see that I lose half my hammers in the early medieval era, it doesn't really feel still viable. Especially because the supposed compensation that should kick in from the extra space (assuming it is there which can or not be true and if it isn't enforced by increasing the minimum distance between cities the AI will never make a good use of this) comes way later into the game, if at all (if you don't have forests and hills you'll have to wait for factories before you get any sizeable hammers from plots). Overall this change didn't boost plot yields, only nerfed city production: it was just a net negative for hammers all around, without adjusting buildings and units cost. If you wanted to make both viable options then just boost plot yields, larger cities will have a lot more hammers this way and packed cities remain unaffected instead.
I guess it's just two different philosophies of game design, incentivize a behaviour by nerfing a better option, or by making that behaviour more desirable making it better on its own merits? A nerf is more destructive to the game balance, then it should come with a lot of other adjustments around it (ie production costs).
There are also indirect ways that could impact the viability of larger cities: options like realistic culture spread and cities start with one plot discourage planning for cities with three full rings for instance. If the third ring of plots came into play earlier, they'd probably be more viable, also if I'm not playing with the option that enables the third ring of plots at influential culture level then accounting for it becomes almost an afterthought, because by the time metropolitan administration is unlocked then it's pretty much irrelevant with everything else that goes on in the game. Meanwhile though, now production is severely nerfed until then, with nothing to make up for it.