Taking and integrating vassals is probably the best way to expand within the HRE now. If you want to be cheeky, a fun way is to ally countries bordering your target on all sides, so that you can partition it completely with each country (including you) ideally getting a single province each. Then immediately release said nation as a vassal from the province you took, cancel the alliances just in case and watch your new subject grow on its own as the emperor demands that your former allies return provinces to them....The frustrating thing for me with Unlawful Territory is the change that the Emperor will ask for it even when you're at war now. Functionally this means it's impossible to take land from the emperor himself without eating the penalty, because if you somehow fight another war with them you can't core the province. Maybe it was too easy to avoid the penalty by chaining wars, but now it's way too hard. And can really futz with HRE diplomacy as mentioned above.
Conquer-release-diploannex is slower than outright warchaining, but vassals do offer quite a lot of power compared to direct rule for small nations as long as they can be kept in line.
Regarding wars with the emperor, the same principle applies. For example, in Austria's case you could take land to release Carinthia and Styria as subjects and then reconquer their lands in the subsequent war. Same with Bohemia regarding Moravia and the Silesians.
- 1