As far as early blitzkrieg, I would say to give cities natural defenders along with associated (new) techs. You could still blitzkrieg (potentially) but you'd be required to heavily forestall any economic development.
For instance, for each city level, the city gains 1 defender. This defender is equipped based on a budget (based on city level and buildings) versus resource cost of all available/researched equipment (so that defenders wouldn't just instantly get the best equipment at an undeveloped city). A palace grants +1 defender and +budget.
Other buildings would then influence these things and add additional city-only tactical options. These would require an upkeep. For instance, people have mentioned archery towers - perhaps these are build explicitly and act like a spellcaster in battle, allowing you a special spell (hail of arrows) that you can cast (draining resources instead of mana). These would count as mixed damage of physical and magical damage, which would mean the player also needs to balance resistances (or build more in order to zerg).
I've also noticed that due to seeding, capitals are more or less the only significant target. There's few other targets of opportunity. In part, this is due to the way the resources are seeded - a lot around the starting location and then falling out there. I would say, just give the palace building itself the various bonuses you want all capitals to have and spread the actual world resources out more so that there's more targets of opportunity. As it is, one goes straight after the capital and in doing so, heavily cripples the opponents economy.
I love this idea, so I fleshed it out a little further:
I don't remember the group sizes past squad, so I'm assuming Sethai is correct (squad = 3, party = 9, company = 12).
Defenses added by city level:
lvl 1: 1 foot soldier,
lvl 2: 1 foot soldier, 1 archer
lvl 3: 1 foot soldier squad, 2 archers
lvl 4: 2 foot soldier squads, 1 archer squad
lvl 5: 1 foot soldier party, 1 archer party
foot soldier: as you'd expect, a defender with armor and weapons consistent with melee combat
archer: ranged weapons specialists
I would love to add a support type at level 5 or with special buildings, but there is no provision for supporting roles in the current tactical combat given available equipment/abilities.
graceful degradation of missing technologies:
if squad not researched, replace w/ 2 individuals
if party not researched, replace w/ 2 squads
I'm not addressing company, since 12 is very oddly proportioned after 9
if archery is not researched, replace archers with foot soldiers 1-to-1
equipment: defenders are equipped based on settlement value, such that the cost of equipment = (calculated value of settlement * modifier)
restrictions: defenders cannot have metal equipment if no metal resources are activated in the empire; likewise for items that require crystal
implication: since the value of a settlement grows with settlement size, defenders should be better equiped for bigger and/or better settlements.
Palace:
Adds the Royal Guard to the defense, which is a single additional group of foot soldiers of size Math.min(citysize.defenderSizeRestriction, largest group size researched)
the Royal Guard should have 125% of the typical equipment value
Royal Guard group size restrictions for the Palace:
1,2 : individual (this might be N/A if lvl 3 city is required to build the palace)
3: squad (3)
4: party(9)
5: company(12)
