Yes it is stupid that a big war which starts out over a small province, leads to you crushing their entire military, then you're like "I'm the most polite gentleman in the world, so even though I am striding titanic-like over your unprotected homeland, I'm going to be a good guy and just take the single county I claimed this fight was about"
Similarly, if some hard-ass Caliphate invades your ass in a Holy War, or a bunch of Pagans come to conquer you... you could have a huge-ass war on your hands, and at the end even if you occupy a heap of their territory, you're supposed to just say "have it back for some piety, or some money/prestige". Weak.
The EUIV system of negotiating peace seems more realistic. On the other hand there needs to be a way to stop insta-blobbing... but wouldn't the best way to do that be to make the game harder (not just in gamey, +20% for the AI ways, either), rather than putting artificial limitations on expansion?