As in real life, the formation of a unit should affect its combat effectiveness.

There are to possible kind of formations: Move and defend.

A unit automatically changes to move if moving or attacking. It also changes back to defense if it has at least one movement point left.

The facing of a unit is determined by the direction of its last movement. If there is one movement point left, the player is able to change the facing manually (could be easily done e.g. by pressing ctr + arrow key).

Attacking: No influence.

Defending:

If a unit is not in defense formation, it will suffer a penalty of 60 % whenn being attacked.

If a unit is attacked directly from behind, it will suffer additional 60 %.

If attacked from it flanks, the penalty is 40 %.

Certain terrains with good defensive capabilities will negate this effects, e.g. forest, hills, cities.

The advantages:

The will be only slightly more effort to control your armies movements, but you get more tactical depth without tactical screen.

Tell me what you think about this.

I like the feeling of tactical control as much as anybody, but the general idea seems to be that it has no place in Civ. With squares representing however many hundreds of square kilometers, it is unlikely that unit facing would make much difference on such a large scale.

Isn't your penalty for not being in defensive formation pretty much the same as the current system of having a bonus for being fortified?

The best way I've seen to incorporate tactical combat in Civ III is someone else's (I forget who's) suggestion that each individual battle take place on a randomly generated "tactical map." That would be neat, and things like facing, defensive posture, initiative, supply, and surprise could be taken into consideration. I wonder if two battles take place in the same square, will it be the same tactical map? It would seem like each square should have it's own tactical map, but wouldn't this just make the map a great deal bigger and take up more computer memory?

I would like to see tactical combat if it can be done well, but I don't think your ideas are quite the best way. Sorry for the criticism; I'm just trying to help.

It might be a good idea to take into consideration whether or not your unit is surrounded by the enemy. With only one adjacent square occupied by the enemy, combat proceeds as normal. Each additional adjacent square occupied by the enemy would confer a cumulative penalty on your unit (or bonus on their unit, depending on which way you want to look at it).
This still suffers from the argument that, next square being hundreds of kilometers away, the effect of units there would be rather small here. Oh well, just thought I'd suggest it.

Those other ideas you mentioned - artillery support, escort fighters - I've seen implemented in a game called Pacific General by SSI. It's on a tactical map, though, and uses hexagons instead of squares. I think there are a lot of other SSI games that are pretty similar to this.

Incidentally, I chose the name Dienstag from a character in the book "Emil und die Detective" by Erich Kaestner(?). I couldn't think of anything else to call myself. Strange, huh?