There aren't any strategies that have you sitting on significant unhappiness throughout the game - it is a serious detriment to your empire.
Conquest can produce some significant unhappiness. In my experience, it is almost always worse in the long run to annex a city. The happiness hit is overwhelmingly strong when you annex, and it's significantly less strong when you puppet. Puppeted cities will eventually build happiness buildings, although it can take a while.
Once you get past the "middle of the road" difficulty levels, happiness is kind of a key bellwether when it comes to expansion. I tend to only build a new city when I can take a happiness hit, and if I can gain access to at least one but preferably two new luxury resources. Strategic resources might trump this, in certain cases. It's very difficult to survive without Coal for Factories, for instance.
Razing a city can be a very legitimate strategy. If you conquer an enemy, and they have some tiny cities that are not near luxury/strategic resources, burn 'em to the ground. Expansion is the primary way you're going to get more powerful, and expansion is heavily limited by happiness. Hanging on to cities that aren't helping you become more powerful is a waste.
Unhappiness is a factor of both the number of cities and the population, so if you've gotten to a balancing point, you might consider setting your cities to "avoid growth" - this will up their production and down their food intake, in an attempt to keep them from getting bigger and producing more unhappiness.
Since happiness is generated by buildings you unlock through technology, science is an important key in maintaining your happiness balance. With Patronage, I'd expect you to be gifting/bribing city states to get access to their luxuries. You can also trade excess luxuries to other civs, if they've got something you need.
Civilization offers many paths to each type of victory. You love war, warfare, combat, and, in general, being a thoroughly disagreeable fellow: there's no reason you can't use this to make friends.
Diplomatic Victory
One way to the love of city-states is through war on the city-states. The way is convoluted, but making peace through war generally is.
Here's how to get one city-state to love you:
- Capture the city-state through war (either against the city-state itself, or with the city-state allied with another civilization that you're at war with). You'll get some lovely faith, culture, and/or gold, if you've picked up your favorite Honor-Aztecs and grabbed the right pantheon/religion/policies.
- Make sure another civilization gets the captured city-state. Either give it to them outright, lose it to them in a war, or make thousands of coins by selling it to them. (You might see something peculiar: the AI will usually reject trades that are too good for it. So if you offer them Vancouver and ask for 1000 coins, they might reject the trade, but if you offer them Vancouver and ask for 5000 coins, they might accept it. I've never seen them reject a gift where you ask for nothing in return, though.)
- Go to war with that civilization, recapture the city-state, and choose to liberate it instead of puppeting or annexing it. The city-state will now love you, and be your ally.
You can repeat this, and collect allies. If you attack the city-states individually, then at some point, most of the city-states will unite and declare permanent war against you. I'm not sure if a liberated city-state that was once at permanent war will forgive you or not, but I think they would. Of course, this convoluted scheme can be made simple if another civilization has already captured a city-state: just go to war, recapture the city-state, and liberate it.
Note: this technique is unreliable. Some opponents will just liberate a city-state when you give it to them, either because they can't afford the inconvenience of owning another city or they really like the benefits of having a city-state ally.
Tourism Victory
The only way to a cultural victory in Brave New World is through Tourism, and the only source of Tourism is Great Works: I don't dispute this. However, your incredible culture income (via your Honor-Aztecs) will make it easy to pick up the Aesthetics social policy tree, and that tree is a huge source of Tourism. Simply starting Aesthetics will give you Great Artists/Musicians/Writers faster, and finishing it will let you purchase Great Artists/Musicians/Writers with Faith in the Industrial Age, which your Honor-Aztecs are earning by the boatload.
Even without your gold, culture, and faith bonuses, you can win a Tourism Victory through simple war. Great Works can be captured from opposing civilizations when you capture their cities, reducing your opponent's future Culture and giving you Tourism. And if you eliminate a civilization entirely, then you don't need to beat their Culture at all; you only need to apply your Tourism to existing civilizations to win. So when Napoleon is the only remaining opponent that you aren't culturally-dominant over, just kill him and you'll take your cultural victory.
Best Answer
The defense of a city is based on its owner's Technology level and its population. While there isn't a specific bonus to city states, this does tend to make them rather well defended for several reasons.
First, there are a lot of things city states cannot build. Since they never build wonders, settlers or more than 1-2 workers, and because each city state is essentially a capital, they tend to run out of things to produce. They usually build defensive structures as soon as they become available.
Second, since city states can only expand up rather than making more cities, don't deal with unhappiness, and are founded in 4000 BC they tend to be quite large- often comparable to capitals.
These factors can often cause city states to have higher defense than most cities anyway (though this makes up for their small armies). In this case there is another factor at work- City States don't have science. Instead, their technology is based on that of other civs. Typically they have any tech that two or more civs have but they can have more if there is a runaway tech leader.
This means that while the enemy civs are multiple ages behind you (since you mentioned needing to play on settler in addition to running that mod), city-states are much closer to your level.
You're also comparing them with cities that are completely crippled by your mod and difficulty. It's actually normal for cities to have a slightly higher defense than the units they're facing- taking cities requires a lot of units.