Since cloaks are a late-game unit for all but quetzali, I think that the number of daggers spawned by a cloak should be proportional to the city level. For example, lvl 1 cities spawn no daggers, just deny a turn's income, lvl 2-3 cities spawn 1 dagger, lvl 4 spawns 2, and lvl 5 or higher spawns the full 3. Alternatively, lvl 2 cities could spawn 1, lvl 3, 2 with lvl 4 cities spawning 3 daggers and any higher level cities spawning 4.
This would balance cloak spam, and would reduce their effectiveness on less developed cities and empires as a whole, ensuring players do not need to worry about their entire empire being swarmed. However, I do like that daggers now spawn on defensive terrain, since it mimics real insurgencies more accurately.
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