Instead of make a huge number of guards, make them invincible or make cities unattackable, which only make the game more strict and lower the "freedom of act", I suggest to do something more "RPG style".
For example you can leave the inner part of Vault City super-protected (since it's a valuable and well-protected, with strong walls, turrets and so on) and leave the outer part more vulnerable. It must be protected with some guards (maybe more and stronger, cause must not be easy to get) but still attackable and harassable.
At the same time, attackers gain a great lose of reputation in the city and you can add something like a temporary mercenary quest when you gain reputation/caps if you kill members of the attacking gang or raid their base.