Provide incentives to limit the number of alliances or peaceful relations a Realm has - perhaps bonuses to Realm loyalty, stability, production as they identify more closely with their home nation (we're different from THEM, that's why we're not allied with those stinking D'Harans!).
Treaty friction was supposed to add an incentive to not have all those extra treaties, by making you work to maintain them. I think the general consensus, though. has been that people *want* to have all those treaties. They don't like it when they can't have them.
War may reduce production loss or discontent amongst the population because they are too focused on the "fight", with increased recruitment levels due to men wanting to defend their homeland - or achieve honour.
Some of these effects are already present. Too Much Peace lowers the acceptable tax rate a realm can have. I believe it also reduces the number of recruits that your RCs produce. (Although that may be tied to low glory. I forget which it is, but it's there. Regardless, it's there, and hits high-quality RCs the hardest.)
There are lots of game changes that can be made to provide incentives to fighting, and reduce the regional hit that can occur because the ability to look after your regions is taken away whilst at war. It makes sense to have reduced relations and war states help counter those effects - making it more preferable and achieveable to sustain war time states without the huge region hits that occur.
A key thing to keep in mind is that merely being at the diplomatic state of "War" should not be enough to get you a bonus. If it is, then you'll get a series of continual cold wars, and war declarations like "Madina vs. Astrum", where no fighting ever *can* occur.
