Every country starts in a cold war status (ala Endless Space), i.e. you can't enter enemy borders without declaring war, but outside of borders armed conflict is possible without going to war.
That way you could use troops to fill in the gaps between your cities and prevent the AI from grabbing every tile at the edges for a city in the middle game.
The rule would not allow (or graduated, mild to severe depending upon the kind of op, diplomatic penalties) for any operations outside of your own borders (there's something to be said for more application of this even now).
Obviously, a treaty could be created for a true, no conflicts, peace.
This addresses ICS without having to alter the 2 territory distance rule between cities.
