There seem to be several issues regarding outposts that people have problems with:
Cost
Consuming a pioneer to build an outpost is expensive, especially compared to Pariden's relatively cheap Monolith. I have already weighed in on this by suggesting pioneers be merely immobilized instead of consumed, just to keep within functionality that already exists in game.
Connection to Cities
This isn't just an issue with outposts, but with the resources as well. Routing materials to Conclaves instead of Fortresses, especially when you are trying to crank out troops, is not always ideal. Built resources and outposts should connect to the nearest city by default, but be capable of being re-routed to other cities. Perhaps limit your choices to the 3 closest cities so that you can't just route all materials to one super-city on the other side of the map. Some sort of quick set buttons on the city screen to route as much materials/food/research to this city as possible would make it less of a chore and probably help the AI use the same tactic. A lock function on the connection to prevent a certain resource from being rerouted by a quick set would be useful too. A delay upon changing routing where the resources don't go anywhere for a few turns might be necessary to prevent gaming the system on a turn by turn basis.
Build queues for Upgrades
The issue still remains for where to build upgrades. Some have suggested separate build queues. I think they are nuts. Would having more build queues make this game more fun? IMHO, no. It would just add more micromanagement. Some have suggested automatic upgrades. That has logistical issues with the order in which upgrades happen, and it seems to remove the tactical decision making process, making it an automatic thing that just happens and you mostly ignore. Some have suggested fixed upgrade levels. That seems a bit one-dimensional to me and cuts off differing strategies. Some have suggested moving outpost upgrades to the city queue and having them affect the ZoC for the city and all attached outposts. This one seems to make sense strategically and would simplify the whole system, in addition to making it easier for the AI to use these upgrades. The only upgrade I can see a problem with is High Tower. That one often gets used only in specific areas to bridge gaps or make more efficient use of outpost costs. It could still just be applied to all outposts connected to the city, but some of the very specific uses that we have become used to are changed. I still think it would work, though.
One byproduct of moving ZoC upgrades to the city is that kingdoms that build few cities could more efficiently gain ZoC bonuses, making less cities a more viable strategy.
IMO, simplifying outpost upgrades to the city level would make them easier to use, and therefore more commonly used, which would make invasions and raids more difficult than it is presently. This is especially true if having them at the city level made it easier for the AI to use them. The "home turf" advantage would be much more significant when invading the AI. I don't know about you, but once I can defeat one AI army, I can pretty much steamroll them from then on. If there were a significant home field advantage it might even the playing field for the less powerful kingdoms that are on the defensive against ones with a large military. This would extend the game and, who knows, maybe I might even be able to research past the middle of the tech tree for once.