Actually I liked Civ 6 Loyalty. I think it worked really well and was logical. Yes it was difficult to settle a colony next to an opposing Civ, but then it should be. However, it was possible to do it, if you had leaned heavily into colonising as a strategy. Some civs are set up to be colonisers, and with the right civic cards and wonders and governors, it was totally a legitimate tactic. That is how it should work. If you think it is advantageous to go and settle far off lands, then you need to be set up to do that, not all civs should be able to do it easily.
I think that is a big step up from the way things work in Civ 7
I don't know if the settlement limit is a more fun implementation. Corruption was always disliked by many people, but the fact that is passive and hard to calculate was part of it's appeal. Settlement limit is such a blunt, simplistic rule, it leads to boring gameplay. You can either stick to your settlement limit (which I mostly do in many games, because it feels better) in which case you just feel pretty restricted. Or you ignore it and min max and do lots of busywork to manage it, which isn't fun either. Either way, it doesn't feel immersive, the blunt nature reminds you that you are playing a video game at all times.
Passive, under the hood mechanics is something the game needs more of, and less obvious arbitrary numbers that make you feel like you are playing a video game.