The reason I raze level 1 structures as the CSA is to try and limit the Union options of advance (without building the resource-expensive forts to protect their supply lines) and to limit the places they can put their forces in the Winter without attrition effects. The ultimate goal is to make the Union supply lines more vulnerable.
In the actual war razing of small towns was common, even early in the war. For example, on the Kansas-Missouri border Union forces under the command of Jim Lane raided into Missouri and burnt Osceola, MO, to the ground in retaliation for raids by rebels into Kansas where some communities like Humboldt and Osawatomie were raided and/or burnt. Eventually, the Union commander forbid ANY occupation of the Missouri counties bordering Kansas. The resentments grew, especially with the locals that were forced to relocate from their farmsteads, eventually resulting in the burning of Lawrence (and the murder of many of its residents) in 1863, and lingering resentments that fueled the James gang and other notorious post-war folk. The Civil War on the western frontier was not civil, and had not been since at least 1856.
I wouldn't be opposed to seeing a 1 VP loss for the side that isn't protecting their level 1 towns adequately, and perhaps a 50% chance of a 1 NM loss to the side being so evil. But both sides saw razing towns as a strategy to punish their opponents.