The debuffs for crippling overextension are pretty hard for sure. I personally find the legitimacy drain to be the least problematic. The tax reduction from vassals and the increased upkeep for soldiers annoy me more.
You can greatly reduce the legitimacy drain right away via court positions. Crippling overextension gives you access to an imperial minister. An excellent one cuts the legitimacy debuff in half, more or less. You have to pay his salary, though.
I usually deal with it by going on missions in the umbra. One standard quest gives you roughly 120 legitimacy, so you just have to do one once every 20 months even without the imperial minister.

Yeah, the taxes and upkeep are pretty evil as well. By now I am so large that I have to spend ~90% of my income on keeping my Court Grandeur on the required level. If I want to build buildings or go to activities I need to go and steal money from someone else. I rule the largest empire in the world and somehow I feel poorer than at the start :-D

One thing that's also annoying about the legitimacy debuff is that there seems to be no way to see how much in total you lose/gain per month or am I blind?

Umbra is a great idea, forgot about that! Unfortunately I am playing as Shadow Inquisition right now so I guess I need to always become a sorcerer first.

Sorcery is very strong but illegal for inquisitors. I got it anyway. The socially acceptable option is theurgy.
Maximum overextension costs 6 per month, only 3 if you get a good advisor. Other talents further modify legitimacy gain and loss. I usually get the advisors with extra tasks that reduce military upkeep and buff vassal taxation. In your case you could win a war about some minor castle against a realm with a kingdom or empire title but a weak military. Bashing other empires over nonsense gives huge legitimacy.
Many of the advisor positons I do not fill because of their high salaries. That tanks my court grandeur, but that´s kind of OK with me.
The best ways to deal with overextension in my opinion are:
a) Be selective about your acquisitions. Go tall. Of course, as inquisitor your hyper agressive vasals tend to ruin that approach.
b) Since the penalty is capped at realm size 150+ or something you grow as much as you can. Your vassals only give like 40-50% of their normal taxes but if you have tons of vassals that is still worth it.

Thanks for the advice!
Does Theurgy also allow me to visit the Umbra for legitimacy hunt?

I wish I could declare not for land but for legitimacy and money. Expanding is easy with 50k troops but I just want to build some buildings and throw a feast every now and then! :-D

No problem. It allows you access to the underworld. Theurgy has less paths than sorcery and feels more limited. People don´t have a problem with it, though, and sorcery is more difficult and expensive to get.
If you just want to farm legitimacy then any part of the umbra will to. If you go for specificy training, items, allies, troops, quests, perks etc. then you need specific access.
Every splat is quite good at farming 1-2 resources and kind of weak at farming at least one. Inquisition and vamps are tight on money, werewolves usually run out of prestige, mummies and fairies burn through faith like crazy, etc.
Inquisitors can not easily ransom prisoners for money, they rely on men at arms because their knights suck, their buildings are great but cost money. However, with theurgy you can get men at arms that require prestige or faith as upkeep. That helps a lot with the budget.

As inquisitor I tend to go for mining settlements. Combined with hunter econ buildings mines really bring home the money.