Balancing gameplay makes sense, but I don't think it is done well. It creates some counterintuitive situations. If I conquer some far away lands I can get the local autonomy down to 0% in a relatively short period, but some lands that lay next to my palace and that have always been inhabitated by my cultural kin can never go below 50% autonomy. Another possibility would be to put a 75% penalty on colonies that slowly decays over time (thoug this might make overseas colonies completely worthless).
Also, the balancing is not really an issue. Since oversea provinces suffer from a much harsher 75% penalty, the only countries to which this penalty is applicable are new world countries, countries in Africa, countries in the far east and, of course, Russia. Except for Russia (do the Russian eastern provinces have this penalty when you choose a later start date?) none of these are overpowered and are in need of balancing.
I think that when a concept appears counterintuitive because it behaves opposite of how it would in the real world, the concept becomes a mere number (which could have been given any other name). Because of this, the concept does not enhance gameplay experience and it is badly implemented.
In my opinion, Paradox almost got it right. Local autonomy is a great idea, but in this setting it doesn't make any sense.