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I'd say it should be punished harder if you migrate the City, so that you are more inclined to absorb it instead.
Migrating gives what, a pretty minor Reputation loss and two less colonists? At a stage where most cities have 12+ colonists anyway?
Also I don't really get how absorbing takes longer than migrating. Subdueing the current Population should be easier than razing the entire City and rebuilding it as yours, right? And the Population would have to be... ahem... "switched out", or you Need to subdue it anyway :D
And commiting genocide on civilians sounds quite bad... worse than just -100 Reputation.

As currently, I personally think migrating is the stronger Option actually, as you can build your own, Fitting Units that synergize with your heroes and mods (swarm shield, Cyborg, animal, stuff like that), without needing any Research. And don't Forget that, since you are at war with that race, this race probably doesn't have the best opinion of you, so they suffer happyness penalties as well, while migrating will boost yours further.

I dunno, I absorbed one City, once, noticed that I have to Research everything and that they were unhappy... now I just migrate. (I've always been a Purist of These Things though, in AoW3 I also only had offensive armies of my starting race. I didn't convert the cities though, as each could have their own races' defenders.
 
lol, I´m 136hours into the game, and haven´t discovered that/how I can research stuff of conquered races...will take a look now xD