You guys are way overdoing it.
Unconditional surrender absolutely should not put ANY negatives on the victor. NONE. It is a stopgap for the ability to just draw out a lost war in order to pulverize the loser. The only punishment for the attacker, literally it, should be lost potential army tradition and loot. Tacking on increased costs, AE, or any kind of limitation goes completely against the entire point of the mechanic.
Sure, with a fleshed out and detailed/lengthy peace process, you could add in these things. In their absence, unconditional surrender needs to be kept in perspective - a way to end the war in the attacker's favor exactly as the attacker would end it IF they dragged it out 5+ years, but without ACTUALLY dragging the war out the full 5+ years.