If you have to sink all of your points into money, your research/manufacturing/etc gets hit too. Try his mod on insane abundant/abundant. It works much better than any system you've hypothesized.
Also, what you don't understand is that in the late game, the LEP penalty from -0.2 Money/planet is effectively nothing. One specialized planet with 50 pop generating income can pay for 50 other planets.
However, the LEP from -0.2 Morale/Planet is a PERMANENT debuff that hurts you even more as you grow your pop larger. The problem with using morale to limit expansion is that it punishes TALL empires significantly- a lot more than WIDE empires.
Once again flat sources of research mean that beyond a certain point you don't have to dedicate any of your economy to research to still get a useful research output.
Again it fails to address growth or influence allowing you to continue hardcore culture spam (which could result in you picking up more worlds when you can't afford them), and doesn't hit growth, (which could result in approval drops you can't afford), and once again affecting monetary income intrinsically affects the maximum number of ships you can support in a negative way at a time when you want that value to be growing.
Hitting wealth isn't a cure all, sure it might limit your ability to expand and produce, but it does little beyond a certain point for your research, (it intrinsically cannot), and has inherent additional undesirable penalties to military as well as two death spiral inducing conditions and a lack of negative effect on another key attribute.
I'm sure it affects production nicely and discourages growth bey9nd a certain point but it does it in a completely undesirable way because of all the things it doesn;t do that it should and all the additional side mechanical affects that it creates that are highly undesirable.
There's a difference between something being a solution, and something being a good solution.
@Naselus: you'll get no argument from me that current LEP fails to do it's intended purpose but again your looking at the research change all wrong.
LEP is there to force limits on how fast your empire can grow wide. It's not intended to make a wide empire less powerful or advantageous. It's merely intended to limit how quickly you can achieve a wide empire. It limits the rate of growth but not the power provided by that growth.
The research change is explicitly intended to make going wide less advantageous. It limits the power provided by growth but not the rate of growth.
Compare the two bolded statements and the two italacised statments. They are not saying the same thing or anything close to the same thing. LEP limits the rate of growth, Empire Research Penalty, (lets call it REP?), is intended to make that growth less powerful.
It all comes back to the fact that no matter what you do you cannot prevent a wide empire from developing it's worlds as well as a tall empire. So going tall has no advantage to it as is now except in that a tall empire can develop those worlds more rapidly. This makes the talls advantage very transitory. An empire wide research penalty doesn't really change that in the long term, but it forces the wide empire to come much closer to the tall in overall development level to exceed it. It decreases the degree of advantage a wide empire has in research as it's the research advantage that really feeds back into a logarithmic cycle for wide empires, they get the better techs sooner increasing their empire wide output more sooner and very quickly start out-developing the tall empire via superior item access.
As for the military, that's really a two pronged issue. On the one hand there's actually quite an issue for at least warships with modules providing more power per maintenance and manufacturing point cost, and that absolutely makes large militaris cheaper to build and maintain, (especially the latter), than they should be. The AI's terrible military capabilities don't help, you just don;t need as many fleets as you should.
At the same time the moment at or just before you expand is exactly the moment the military needs to expand to cover the new growth adequately, creating a situation where someone is forced to expand before they have the military to protect it isn't good game design as your deliberately asking them to sit asses swinging in the wind begging the other guy to come hit them just to grow more powerful. Taking that kind of risk should be a choice not an enforced reality.