Calling out the Citizens' Militia is a last-ditch strategy. Usually at that point only the capital remains and the defenders are playing for time. Sometimes that pays off, mostly it doesn't. Having it completely nerf the region would remove any possibility of the realm surviving so why not just remove the Citizens' Militia in the first place?
However peasant mobilisation is usually prompted by hatred for another realm as their troops move through a region and provides a counterbalance to excessive looting as well as a lever Diplomats and Priests can use to influence events. The fact it inconveniences attackers is no reason why it should also inconvenience defenders.
Production is already reduced proportionate to the extent of peasant mobilisation, affecting both gold and food. Extending that to affect RCs would be interesting but it makes no sense unless RC-quality militia units are spawned and when they disband refill the RCs they were drawn from.
And if we go that route I think region Lords should have an option to call out their local peasant militia without honour or prestige losses. Medieval Lords had few qualms about using feudal levies.
