yeah it was the Britain campaign that got me thinking about cultural conversion and the like. I played as the Irish and had expelled the English from Ireland, and noticed that the English majority in the north slowly began to become Irish.
Then I began to think of how this could be applied to my favorite mod.

I think that cultural conversion could take place in many forms.
exterminating the population would be the quickest way to remove undesirable cultures, but this would make your recent conquest unprofitable in the long run.

Making them slaves would help dilute the population, but expect mad unrest!

Simply occupying the settlement should play out much differently. If it could be implemented I would like it to take longer to subjugate larger settlements than smaller ones.
Building a lvl. 1 gov't should be the primary means of cultural conversion. That being said, it should take very long to build and should lead to much unrest. This would force you and the AI to keep large garrisons in these towns until the natives become complacent with your rule.
On the other side, a lvl. 4 puppet government should be quick to build and lead to minimal unrest. However, income should be much lower for this region, while the player will only be allowed to construct limited buildings. Only military buildings and those based on trade and should be allowed to be built ie. garrisons, roads. Cultural buildings like shrines and theaters should be restricted for lvl. 4 gov'ts. In essence, they will be a quick solution to invasion and any altercation in gov't, such as lvl. 2 and lvl. 3 gov'ts, should be met with increasing resistance, respectively.
lvl. 2 and lvl. 3 gov'ts should quicken cultural conversion rate.

I think building military settler and trade colonies should minimally alter the conversion rate.

Other buildings like wonders should affect culture as well. ie, keeping old Persian wonders will make it harder for a Greek power to enforce its culture in the east. Other starting wonders should continue to affect cultures well into the game, such as Alexander's tomb, which, if not destroyed, will continue to Hellenize Egypt. It would be a welcome bonus if destroying such structures would anger those it appeases. So destroying that massive temple of Zeus should still give you a lot of money, but will trigger a stack of pissed off Eleutheroi.

Overall, cultural conversion should take place at a slow rate (or fast depending on how much money you are willing to spend) so that raising a Roman majority in Cisalpine Gaul will take some 400 turns...that is, if you don't massacre the native Celts and set up a Roman majority in a land with virtually no people.