Well K'shar, what this does is forces players to make consecutive gangs on a country to accomplish anything worthwhile. Just as an example, say England controls a bunch of coastal provs all around Europe, and has close to 2000 naval support because of it. All the other European powers combined can barely counter this together, so they form together and try to stop England.
They win the war, but, oh, sadly they can only demand 5 provs

. Thus England only loses 50 naval support despite losing a huge war against the gangbangers. And lets say that the English player was smart enough to hide his fleet during the war, and just said "fuck it, take whatever 5 provs you want to devide amongst yourselves, I'm not even going to fight over this".
5 years later, he DOWs one country, rapes it easily, then another, and another. The coalition won a major war against England, so it should be crushed, right? But 5 provs wouldn't even make a dent against such a power country.
England defeats all its enemies in turn, we'll say it attacked 6 countries. All in all, it takes 30 provs off them combined and is now far, far more powerful than it was.
The nations pull together and try to defeat England again, but so what if they win? The best they can do is take 5 provs between all of them, who cares if they accomplish that much? War is hardly worth fighting for such scraps.
And no, 5 years is not a short amount of time. It's 1/4, or often in our cases, 1/2 of a session. And assuming a country is not at war with another country in the interval, it's ussually more than enough time to recover and start over again.
-------------------
That's just one argument. There are quite a few other reasons that this peace rule is indeed retarded, and why it does not belong in this game. Most of the other reasons, whether you choose to ignore them or not, have been touched on already, so I may let them go.
However, whatever the final decision is on this, I expect the decision to not be retroactive. If sufficient clarity was not given about this rule earlier, it's the GM's fault, not mine or Zeits, so I expect no editor to lay a cursor on the provinces I or any other country gained during the session.