The stability system works well for this game, even if it's gracious for the larger civs - if you stick to your core regions, your stability will remain high, but if you go Napoleonic and roll through Spain, Germany, the Low Countries and into Poland and Russia, that stability rating will go way down, just like it did in real life. Similarly, if playing as the Ottomans, you can capture their African provinces beyond Egypt (which should be OK stabilty-wise since they're historically valid), but these are ranked unstable for the Ottomans, and to secure them means your empire grows shaky and stagnates (just like the actual Ottoman Empire).
I think the stabiliity system is quite well balanced, and allows you to play your core empire with ease, or try to recreate the whole empire with a bit of challenge, since you have to manage not only your military strategy, but also your expansion strategy as well. After I've played through all the UHVs, I'm going to see if I can't get a full Habsburg empire built, with Spain and the Low Countries under my thumb.
(By the way - to get really high stability numbers, play as Muscovy or the Ottomans. They have so many provinces they can expand into without penalty it's insane.)