Artificially restricting diplomacy causes all sorts of problems. It was part of the goal of the New Treaty system that required treaty maintenance to keep them going. The more you had, the more maintenance work you had to do. What it leads to is a lot of "under the table" alliances and understandings. So, for example, Perdan and Westmoor may not be officially allied, but everyone knows that if you attack Perdan, Westmoor will help them kick your ass.
Plus, players *hate* artificial limitations like that.