The faction system needs to change
No, it doesn't. I started in 1066 as Rostov, have united all the Russian lands, control all counties all the way to end of the map and bordering Khiva, inherited Denmark, own the whole of Finland, Lithuania, Prussia, Livonia (I am ready to declare myself King of the Poles), got Thrace-Constantinople back from the Ilkhanate (for the glory of the Orthodox faith). I have 82 vassals. It's 1330. I haven't had a single rebellion!!!!!!!!!! I BEAT THE MONGOLS ON FIRST CONTACT. How did I do that (and I am new to this game).
Through good management of vassals (spend money on them), spymaster (scheme) and diplomat (increase relations with strong members of factions), it's actually easy (though time-consuming).
I also tested this in-game which appears to work excellently:
I have created every single Kingdom title in my Empire and usurped all that I could (because you cannot create all Kingdoms if you are the wrong culture). I KEEP ALL KING TITLES FOR MYSELF. Yes, this gives me a -20 for everyone desiring each Kingdom BUT: This means that the factions are split between the Kingdoms, especially the Lower Crown one's. Rather than have a single strong Lower Crown in Russia, I have 4-5 weak one's (Lower in Georgia, Rus, Lithuania, etc) which I can very easily handle. And because they are small they don't dare do anything stupid.