Although this is a personnal point of view, you make it sound as a truth. When I westernize, I expect to get rebelions all over the place (as is implied by events about people resisting westernization,...), but with the current design, I just don't. I press the magical stab button, and everyone forgets about my innovative policy. It should be a slow process, with a tough begining, and things smoothening over time, which is what a limit to stab raising would provide. Same for other situations; a stab hit during war and going in the negative could be an incentive to peace out quickly rather than suing more favorable terms.
A similar system for WE would make for shorter wars, rather than the old total war system; if I were limited in how much I could lower it, I would have to sue for peace at some point, or face the risk of dangerous rebelions. You would have to weight the possible gains and the possible losses; that would be a more logical soft cap to expansion; if you could manage your own business fine, you could keep expanding, but if you were to be a bit too ambitious and involved in a tough war, then you would have to pay the price for it. The current design just doesn't make sense; there are many mechanics that on their own could mimic disaster system, yet rather than having a "disaster-like" scenario happening with low stab while involved in a messy war with low legitimacy (rebelions because of high unrest; no need for dedicated events), it makes those modifiers insignificant and implements revolts through events.
By the way, the "time-limited fashion" used to be how it worked in EUIII, with similar modifiers (revolt risk,...); you had to choose how much gold to spend monthly for stab and tech (rather than MP), so it's not really a suggestion "without additional strategical consideration", as it would be a direct mimic of some of EUIII mechanics (one of which were better in my view). I'm guessing it has been changed to make things easier rather than just a "MP sink", but it failed at it and both stability and war exhaustion aren't modifiers to be feared anymore. Even inflation; I can be the Aztecs, get like +0.15 monthly inflation and still keep sitting bellow 2. Might as well outright remove inflation and just pop an event "you're mining gold! pay 50 ADM to proceed!" from time to time.
What I mean is that the game tries to be complex, has many modifiers, but in the end it just add rules on top to make this apparent complexity insignificant. I could go on about how I either sit on 0 prestige at start or 100 prestige 50 years in, but this is getting off topic.
Stability has very little role in how many rebellions you get inside westernization processes, though. I do not see how changing how stability works would make westernization harder. Seriously, tolerance of the true faith and minus revolt risk modifiers play a much larger role than stability (Stability only swings from a +6 to -3 range on revolt risk, so once you get it off -3, it's already mitigated by tolerance for most nations.). Going religious or humanist (or both, but that's overkill) single-handedly confirms getting very little rebellions during the westernization phase, and stability is not a part of that one at all.
Making WE decay over time instead of a button would not make wars shorter because the AI demands to fight wars to the death, even if it's over one province halfway across the world. War exhaustion is hardly a player concern, not because they can pay it down, but because it goes down after war and because DotF and Innovative -WE decay exists. Buying off WE through the button has limited use outside of a very heavy truce-break strategy, and those tend to take Aristocratic and Diplomatic anyways, which would theoretically speed up the process WE ticks down through the button anyways.
Stability drops are too common for them to be a feared variable. If they were less frequent but had greater repercussions, I would be inclined to fear them, but the frequency of stability drops means they're not very dangerous on their own. The very fact they're not that dangerous on their own but are that frequent is balance, because stability drops being both common and dangerous would be far too easy a game over scenario.
Inflation is on its own issue, but in most cases where you have to care about it, you grab economic anyways to passively mitigate the damage gold income does. I see no reason changing inflation would be better in that regard.