Vietnam, Iraq, Afghanistan
I will point out that all of these have involved a degree of external support for the insurgents, as well as insurgent access to relatively safe areas due to the occupying power's lack of interest in expanding the war (for example, in the case of Vietnam, while the US did conduct bombing raids into North Vietnam and used special forces and bombers to harass Viet Cong and North Vietnamese forces outside of North and South Vietnam, North Vietnam was never seriously invaded, despite providing backing for Viet Cong operations up to and including the deployment of regular army units in operations inside of South Vietnam).
The issue for the US in Vietnam and for the USSR in Afghanistan wasn't their inability to deal with the insurgency; many histories of the Vietnam War have gone so far as to claim that the Viet Cong was essentially defeated, and then crippled by the Tet Offensive, and that the insurgency in South Vietnam after that point was largely due to North Vietnam's commitment of significant military forces to replace the Viet Cong. The success of the insurgency in USSR-occupied Afghanistan was largely made possible by US-supplied weapons, training, and money, and sympathetic neighboring nations allowing the insurgents a safe haven for training and safe supply routes in areas that the USSR wasn't willing to go into due to concerns about drawing other nations into open warfare. In the case of Vietnam, I will further point out that South Vietnam's existence as a nation was ended by a conventional military offensive conducted by North Vietnam, not by a successful insurgency which overthrew the government. The insurgency may have weakened the government sufficiently to allow the conventional offensive to succeed as well as it did, and the insurgency's continued high-profile attacks crippled the US government's attempts to maintain support for staying in Vietnam, but in the end it essentially failed as the tool for toppling the country. The insurgency certainly succeeded as a tool for removing the US from Vietnam, but by the end it was a broken tool discarded for a more conventional tool for forcibly unifying the country.
Iraq and US-occupied Afghanistan were essentially wars against an insurgency supported by an external criminal network which had previously been trained in asymmetric warfare against a similar opponent. When added to general instability in the region, which allows the insurgents access to safe havens due to corrupt or powerless regional governments, and a lack of a significant effort to permanently deny these safe havens to the insurgents because the US didn't want to significantly increase its commitments or pick a fight with additional nations in the region.
This is not to say that your argument is incorrect; rather, I'm saying that your argument is incomplete. An insurgency with little or no outside support is likely to die off, or at least become insignificant, and a power that lacks an incentive to not expand the war (or lacks enough sense to not expand the war, as with Germany, Italy, and Japan in WWII) is going to be much more effective at crushing an insurrection than one which has such an incentive. Fortunately or not, games typically lack a decent way to provide indirect support to a faction to allow for these types of insurgencies, and I've never seen any decent incentive in any strategy game for not expanding the war while in the mop-up phase unless you can remove a faction by other means (e.g. granting a faction an alliance treaty so that you don't have to conquer that faction during mop-up).
I will also point out that there is a danger in any artificial end-state to the game. It's a sandbox; if I want to conquer the entire world, then I want to theoretically be able to do so. I don't want enemies to just roll over when I control, say, 75% of the map just because the developers decided that 75% of the map was the reasonable point to set the conquest victory at; on the other hand, I also don't want to have to conquer 100% of the map every single game in order to win, and in a game that takes as much time as GCII and Elemental can there's really no way to know where I'll draw the line in advance. I think that Distant Worlds did a decent job of setting up an end-state for the game that could avoid prolonged mop-ups - you could set up a variety of victory conditions that all contributed to your score in the game, and there was a player-defined threshold for what percentage of the victory conditions had to be fulfilled in order to qualify for victory, as well as a setting that disabled the check for victory until X amount of time had been spent playing, and it also supports a fully-sandbox mode where there are no official victory conditions.
Personally, I tend to like the stage of the game when there are many nations of similar power levels, and so I tend to try to play in a way that preserves the balance of power, perhaps allowing a couple great powers to form but generally trying to prevent anyone from being wiped out, rather than in a way that correlates more strongly with 'winning', and for similar reasons I typically disable as many victory conditions as I can because I don't want to have to go wipe out Resoln because they're about to cast the Spell of Making or something like that. Clearly this isn't something with a traditional victory option available, and when I play a game out like that it typically ends when I decide I want it to, which only rarely involve me deciding to pursue one of the traditional victories, but the earlier the traditional victories kick in, the more likely they are to interfere with my sandbox because, well, sometimes it's fun to play the biggest bully on the playground, and sometimes it's fun to let one of the opponents become the biggest bully and then see what I can do about restoring a balance of power, or even completely reversing it.
Over all, I feel that victory conditions are useful for giving players a goal, but harmful in that there's some impression that any game that doesn't end with the victory condition being met is somehow a defeat. I also feel that there's no good way around this, because while Person A may feel like that slog through the last 10 independent cities/planets/whatever left on the map is terrible today, they might feel otherwise tomorrow, and Person B may enjoy that stage of the game as much as any other period in the game. Worse, in my opinion, is that if the victory condition is 'one nation controls X% of the map', it limits my options to play an extremely asymmetric game. If the game ends when I and one other nation are all that's left and one of us has that X% of the map, it means that I can't play on and see if I couldn't turn the tables around, or see just how long I can continue to fight off this one overpowering enemy, which is sometimes fun to do.
I tend to think that the original Rome: Total War did a better job of end-game balance than most games that I've played; while bringing your nation to the position of sole superpower did give you overwhelming military force, it also gave you significant military commitments in that your cities generally required relatively significant military commitments in order to maintain public order, which meant that even though your empire and your military were enormous in comparison to any of your opponents, or all of them combined depending on the state of the game, you didn't necessarily have that much of an economic or military advantage over any of them (in theory, anyways. I can't say that the end-game economy in R:TW was sufficiently balanced to prevent you from massing up a sufficiently large field army to steamroll any opponent even if you only used auto-resolve and kept your cities garrisoned by high-end units like Praetorian Guards, and got worse if you went for peasant garrisons instead).
As far as the empire-size penalty goes - I cannot say that I am overly fond of penalizing success that way. Within limits, it makes a degree of sense, but on the other hand the United States is larger than all of Europe put together and yet has had a more stable government than France over the past 200 years. If it's done in a way that makes the player commit an increasingly large portion of their economy to e.g. garrison forces to keep the people happy, then it's not terrible. If it's done in a way that doesn't really effect the player's ability to field a large military force and send it to wherever the player wants that force to be, then it's failed in its purpose, and I tend to feel that this is what happened in E:FE and E:FE:LH, especially since there's no revolt risk and the only garrison that actually reduces unrest is the one that is made up of some number of champions. Yes, unrest in E:FE and E:FE:LH does prevent me from gaining quite as much of a technological lead on my opponents, and if I let it get too out of hand it means that I'll have some fairly underdeveloped cities, but it utterly fails in encouraging me to devote increasing military forces to protecting my empire's interior, because there's no actual benefit to doing so - city garrisons will not reduce unrest levels within the city unless it's a champion, so unless it's a champion there's no point in stationing units on the interior, so my military expenses grow more or less as a function of the amount of frontier to defend, and E:FE and E:FE:LH maps typically have very few particularly open areas, which tends to mean that the amount of frontier to defend typically doesn't change that much as your empire grows. At least R:TW had the occasional bandit army spawn in safe areas and Warlock had the (unfortunately a bit too common) monsters-spawn-from-empty-space mechanic to encourage keeping at least a few units in secure parts of the map to help keep the military expenses growing at a similar rate to the empire's income.