Fredmonroe - there's nothing balanced about it, because it allow you to deprive a nation of half its core provinces or more at little to no cost, leaving that nation (which just lost a war) in no shape to reclaim anything, and getting ganged up by a dozen other nations which will also demand release, thus resulting in implosion.
I don't play much of vanilla EU3, but I don't think the mechanics here have been changed that dramatically from the mods I play. Depriving a nation of "half of its core provinces or more," is quite a formidable task war-score wise. In the case of France, you would need an absolutely massive warscore that would most likely take several years possibly even decades to achieve. Several years of total war would severely limit many things in EU3, like your teching and province upgrades, not to mention it would increase your War Exhaustion, and would leave you extremely weak in the case you were attacked - which when you're at war is when the AI tends to strike.
I wouldn't describe that as "little to no cost." If you annihilate an enemy in total war, then you should be able to demand a lot. And while total wars aren't accurate for the beginning time period, like it or not, it is what the game simulates. If you want examples of "liberation" after a total war, you can look at what happened to Austria-Hungary after WW1, or Germany after WW2, or France during WW2.
Losing a war terribly, as is required to even have extreme amounts of released nations already makes a nation very weak due to WE and lack of money and manpower and standing armies, etc etc. I don't see how a nation being susceptible to attack from other nations after it loses a war is an argument that releasing nations is overpowered.
Whether or not they're allied with you is irrelevant when their former master has lost all their armies, and will be getting jumped upon by anyone with half a CB, and be consquently forced to release even more nation, before they even have a chance to recover. All the more so if you just forced them to release half of their most valuable provinces via balkanization.
I think it is extremely important. Perhaps we've had different games, but I've had a lot of instances where the mother nation was able to regain its power once I abandoned my alliances with the splinter states. Having alliances or not is the difference between there being a chance for recovery, or none at all. It is also an overpowered option for coalition building, which makes the game much too easy.
It's not a realistic or historical option, it's not a balanced one, and it makes taking big nations down way easier than it has any right to be.
The problem is that EU3 and most likely EU4 model total wars, which are not really historically accurate until much later, some would even argue not until even the American Civil war. However, the realistic and historic precedence for total wars very often does lead to devastating peace conditions. IF EU4 is to model total wars, then heavy surrender terms are both realistic and historic.
Balance wise it's another question. If forcing a nation to release a huge amount of it's country requires little warscore, then I agree with you that that is not balanced. If it requires a huge warscore, like utter 100% victory for example, then I feel this is balanced, and often times is very hard to achieve. It would not make taking down a huge nation to size easier than it has the rights to be.
