While I haven't experienced any problems (or any real effect yet) of the Dead Civvie count; even though they seem to consistently run directly into alien fire, I have a proposal.
I won't make up a scientists name here to ask you for significant funding:
While the dead civilian count as of the moment is necessary to compel the player to respond to incidents (although ATM I'm F-ed because my Casablanca Base can't reach the damn Wellington mine), there should also be some sort of reward system for players who DO respond, and respond effectively to these incidents. Something to encourage the use of that little "Replay" button at the after action report. A bonus, an advantage, for taking very few casualties. Since the mechanic is already counted in the game, Civilians Saved stat, perhaps the player should need to maintain a ratio of saved versus killed, say, every saved civilian counts as 1 or fewer civilians killed (or some funding equivalent). I believe as of now the number of civilians saved boosts happiness, but otherwise see no other use for the stat. Or, you could do something as simple as you can only let X number MORE civilians die than you have saved. This way, even if your poor and can't build 6 bases, or your dropship can't reach wellington, you can still keep the game from ending by performing extraordinarily at the missions you CAN reach, until you can build those six bases and reach Wellington...