Maybe the consulate should be removed, nerfed, have a drawback, or move way high up in the tech tree.
As for occupation- I agree penalty should eventually go away completely, I think the mechanic needs to be changed slightly.
Garrisoning a town reduces the unrest penalty.
Normal troops count as 1 point per unit in terms of reducing unrest
Governors counts as their level points in terms of reducing unrest.
Other heroes or summons count as 1 point only.
X number of points = 1% reduction in unrest (points should probably scale with map size)
When unrest is down to 0%, the town is the same as if you built it, and militia will spawn.
Certain spells or faction traits could speed this up.
Unsure if this is too complicated, but I think it's the best compromise and one that would force a choice instead of having an easy answer like the current system, and accomplish the same goals.