I am a big fan of this change, the AI should not be more friendly to the player than every player would be. It also makes diplomacy more fluid and realistic., in history alliances also switched as was opportune for those involved at some points. (One famous was the diplomatic revolution following the Austrian War of Succession in which the Habsburgs and French buried their 3 century old Rivalry to ally each other against Prussia, England, ...). Before it was a bit too stagnant out of rare cases were countries went Rivals or Hostile due to desiring large chunks of your territory. It also creates more historical outcomes, such as Austria (and Castile) finally pursuing their historic paths and generally the large number of Succession Wars in the EU4 timeframe.
As mentioned above the PU Casus Belli of Castile can be prevented, even in the current mission tree: you can make Aragon lose one of its mainland provinces so the mission is not completed (it requires Castile or its subject to hold all of Aragons mainland territory), with luck that can happen even without your intervention when France attacks Aragon and takes 1 or more of the border provinces, it happened (as bad luck) in my Castile game. If you don't manage it you can avoid war via getting strong allies such as England, France or Austria.
Finally, it seems currently that the switch to Domineering is happening nearly all the time. If the 80 Trust restriction already exists as mentioned that's already a good point, IIRC this also prevents the AI from choosing the player as Rival. Besides that the AI should weigh its chances, if it is totally unrealistic it should not go domineering. However, I think it should still take high risks though and try to go for the PU against larger nations if there is any chance, even if it is fairly remote.
It could also be differentiated between difficulty levels.
