This does not apply in any way to humans, be it in SP or MP, right? If a human was able to prevent/delay peace deals by just destroying all his forts, this would have the potential for exploity tactics. Since the AI is not going to burn down all its forts, there does not seem to be much of a problem if it just something to guide the AI.
One thing that does come to mind however, and that I can't check right now (at, err, work
): do the American natives start with more castles than their capitals? If not, this modifier might make it even more unlikely for the (European colonizer) AI to ever conquer the Inca or Aztecs, or for AI Inca to conquer Chimu, which seems kinda bad.
One thing that does come to mind however, and that I can't check right now (at, err, work