Found this in CityView.lua:

Code:
		-------------------------------------------
		-- Raze City Button (Occupied Cities only)
		-------------------------------------------
		
		if (not pCity:IsOccupied() or pCity:IsRazing()) then		
			Controls.RazeCityButton:SetHide(true);
		else
			if (not pPlayer:CanRaze(pCity)) then
				if (pPlayer:CanRaze(pCity, true)) then
					Controls.RazeCityButton:SetHide(false);
					Controls.RazeCityButton:SetDisabled(true);
					Controls.RazeCityButton:SetToolTipString( Locale.ConvertTextKey( "TXT_KEY_CITYVIEW_RAZE_BUTTON_DISABLED_BECAUSE_CAPITAL_TT" ) );
				else
					Controls.RazeCityButton:SetHide(true);
				end
			else
				Controls.RazeCityButton:SetHide(false);
				Controls.RazeCityButton:SetDisabled(false);		
				Controls.RazeCityButton:SetToolTipString( Locale.ConvertTextKey( "TXT_KEY_CITYVIEW_RAZE_BUTTON_TT" ) );
			end
		end
So I suppose we could make capitals razable, but I'm wondering whether this would have any implications (outside of domination type victories)