My personal solution would be to make WE global and have a WE capacity that changes based on the type/scale of wars you're involved in. So if you're at war for a single system the cap barely changes while being threatened with destruction scales it up massively. Additionally your ethnics/traits/whatever would also affect that cap, so militaristic empires have a larger WE capacity in general while pacifistic ones have it smaller in most offensive wars and larger in most defensive ones.
Obviously you gain WE by losing ships/troops, having your planets bombarded/invaded, occupied planets and so on. But more importantly, you lose WE when war is declared upon you or a current war escalates. So if you're at war for a single system and then the enemy pushes more claims onto your land, you both lose WE and gain a larger WE cap while your enemy only enjoys the larger WE cap. If you're in a big, long war and someone else jumps in then you similarly enjoy a WE reduction but your cap remains the same. This also means that if you just finished a massive war and then someone tries to snipe a few systems from you, you get enough of a WE reduction to prevent your empire from auto-capitulating but not enough to completely negate it.
Declaring war on someone while already at war should probably result in a WE increase as your people don't want to get embroiled in another conflict. Obviously this malus shouldn't occur when declaring war on the allies of the same person you're at war with, and similar situations. Alternatively you could be prevented from declaring war if your WE is high enough, based on a percentage of your current WE capacity. So pulling a Sci-fi Schlieffen Plan would only be possible in the early stages of a war. To be honest I'm not entirely certain how I'd resolve that edge-case.
Being at peace should reduce WE over time, especially for certain ethnics/whatever, and obviously WE has no effect on your production/research while at peace. You should also get a WE reduction for making peace, especially if you made gains or enforced your demands. Thus a short, victorious war should actually reduce your WE overall and enable you to keep on pushing if you have the capability. The amount of WE you lose for making peace should obviously scale based on how many wars you're still involved in. Ending your final/only war should reduce far more WE than ending conflict 1 of 7. Edicts and the like should also exist to increase WE reduction while at peace, so the player isn't locked into watching numbers decrease to 0 before starting their next conquest.
Going over your WE cap would grant you penalties, scaling by how much you've breached it. The penalties should help the current war wind down without significantly impacting the empire's ability to wage future ones or resist steamrolls. So defending systems/planets should get minor maluses, production/research moderate ones, while trying to perform counter-offences should have large penalties. Part of these penalties would involve auto-accepting Status Quo offers (ideally with a timer) after breaching the cap and auto-sending a Status Quo peace offer at certain (high) percentage over WE. Auto-sending offers should only be done if you haven't sent at least one since breaching the WE cap, however. Having a very low WE could grant you bonuses while at war, though obviously not large ones, as your people are enthusiastic for the upcoming war. If this occurs then Gesalt Empires would get lessened penalties from high WE but lessened bonuses from low WE as well. So they're less effective in the short term but better in the long.
Basically this should hopefully resolve several problems with the current system.
- Since you have to send a Status Quo offer at least once after breaching the WE cap, you can't prolong wars indefinitely. You have to eventually send a Status Quo offer after breaching the cap and always accept them once you do. Ideally players should send the offer well before this point but that won't always be the case.
- Since auto-accepting is on a timer and auto-sending is on a high percentage over WE, players should never be caught off guard by the sudden end of a war. They can thus push to minimize loses/increase gains in the limited time-frame they have should the war last that long.
- Penalties are impactful for the current war but don't affect future ones too badly. Being at high WE for a long period of time won't cause you to stagnate and fall far behind everyone else.
- Small wars results in low WE caps, meaning that taking a few loses results in quickly breaching the cap and quickly resulting in an end to the war.
- Large wars result in high WE caps, meaning that you need to take large loses before WE forces an end to the war.
- Fights to the death result in massive WE caps and a very low chance of the defender surrendering without being completely crushed. If bonuses for a low percentage of WE are implemented then this also assists the defender in the early stages of the war.
- Escalating wars results in increased WE caps and reduced WE for the other side. Capitalising on another side's WE penalties is thus difficult to achieve.
- Other empires piling on you while you're already at war results in an increased WE cap and WE reduction so you have breathing room to fight them off.
- The player has the ability to increase WE reduction while at peace, to prevent the problem of 'hurry up and wait' with WE. Though if WE is still high after ending a war then their empire probably needs time to recover anyways.
- The potential for lots of flavour as your people surge to the recruitment centres or wearily pick up arms to fight off the latest wave of invaders. But Stellaris's design philosophy seems to be as bland as possible so I doubt that'll ever happen.
I'm sure there's a shitton wrong with the system I'm proposing, and a ton of number crunching is needed to keep it balanced and entertaining. For example, a war were one side has far less WE cap than the other could prolong the war for a very long time. The economic penalties for high WE means that the smaller WE cap empire can chug through a long war if needed, while the larger WE cap empire obviously has more pressing conflicts to worry about that encourages a quick peace deal. So ideally that edge case shouldn't be a massive deal-breaker. But then again I never said this was anything beyond pointless rambling so whatever.
