@Duke of Nova Scotia @Cryostorm whilst I agree collapsing the HRE/German Empire is bad, I don't think a simple "Cool, lets peace out" actually solves any long term problem. It just ends THIS war. We don't solve the geopolitical threat on the western border.
I've stated already that really that this war, assuming we're on the cusp of the victory we're about to see in Macedonia, has to be a situation where the Roman Empire are the ones able to project power into Germany, rather than the HRE able to project power into the Balkans. You're also right that we don't want to get onto the North European Plain - that is a German problem. The Romans need to get control of Vienna and the Carpathian basin. No new buffer state there, just a great, big Roman fortress, with infrastructure set up on the Danube, the lot.
A quick peace may seem tempting, but that is what always happens, and then the Latins attack again, and threaten the European Heartland of the Empire. The Alp-Carpathian-Pruth (if we include the Vlachs) makes effectively a Fortress out of SE Europe, with the only real territory worth fighting over nearby being Bohemia (with its lovely mountains)
A disaster in Macedonia gives probably the best chance to change the current geopolitical reality in Europe in Constantinople's favour - and this doesn't have to destroy the HRE. Bavaria is near the Romans, so a Wittlesbach-Roman alliance secures borders - Bohemia is a rival in the HRE, so supporting them in an alliance could create a powerful leader that borders the Romans. It isn't in the Roman interest to watch Germany collapse - just maybe to end the title of HRE, in exchange for the German Empire.
So yeah, Theodore being captured would be nice, but that isn't going to lead to the secession of land. Just short-term chaos that the Romans can take advantage of to roll back Theodores invasion. What he does give is the chance for him to give up the title of Holy Roman Emperor to Demetrios III. A rather nice turnabout considering the reason for the war.
This hasn't been a quick peace though, it certainly wasn't easy. I would love to see the ERE control that all, and to the Rhone, and all of Italy, and all of North Africa. Heck all of Africa, Indonesia, and the Philippines. But the money it would take to do what you are describing would cripple the Rhoman economy. It would be on par with the USA invading all of Canada, and turning it into a fortress on all angles, even the northern territories & archipelago. Hungry might be a people that's been knocked down, but I would not want to rule them if I wasn't Hungarian.
I am really on the fence when it comes to taking the fight to the Kingdom of Germany. Casimir would be ceding land to the Vlach perhaps. But what can Theodor really give up in the Balkans? The best Rhome can do it is have southern Hungry split from the Drava and made a puppet? Zagreb to Novi Sad? Then you are stuck with dealing with the Ban of Croatia, and Theodor now has a Hungry that would be in revolt, ruled by a man who is tight with the King of Bohemia, his biggest rival, I don't see him going with the flow. He's an idiot, but he's not stupid. The Serbs would want some of it too. The Balkans for the most part is pretty well locked up in the Rhomans favour, with Vlachia on the lower Danube/East Caspians, and Serbia covering the north-west Balkans. In fact you could give that whole territory I described to the Serbs to strengthen them. Belgrade however should be brought under the direct control of Constantinople, if it isn't already. It would take an invasion of Mongol proportions from Rhome to be able to bring Hungry into the fold, even as a vassal. A punitive campaign of destruction up the Danube however, maybe. But what does that get you? D3 isn't a medieval king, this is the first modern enlightened ruler. We've seen "renaissance kings" in both A-N and Helen all born into the role. We started to see it in A3, but with D3 we have a bureaucrat, turn Emperor. He will have the most control over his government than any other I would say, beside the Spider Prince. He understands the cogs that are moving, and has the tools and temperament to change what he sees needs changing. The only people who want this war is Henry, Casimir, the Pope and Theodor. Nobody else wants this mess, not the german princes, merchants, certainly none of the Rhomans as has been stated.
The real threat is east, as important as Europe thinks it is ITTL the money has/will always be in the east for Rhome. They are merely the customers, for Rhomes goods. As I say that though, Italy is as important, because historically its second most deadly enemy has come from there. It took England, Ireland, and N. France plus Germany to invade Rhome through the Balkans. It took the stars, planets, moons, and comets to align such a way to have that happen, plus the changing of dynasty of the premier power. And they still barely got into northern Macedonia, and it wasn't pretty.
At the end of this you could see Elizabeth, (if she is still alive, you never know) see Demetrios was never really against her, he just wanted a strong Empire. Maybe even respect him.
As to the peace and HRE question I'd have the it destroyed, it was a fabricated title created by a Germanic pretender, there can be only one. The Crown would be struck, and it's jewels split between D3, and the people of the affected lands as beginning restitution for the war brought upon them. He could sell their half of the jewels back to the now "Whatever" of the German Nation, for the cash to help them. D3 realistically on top of the ending of the title of the HRE, can force Theodor to not interfere in Italy, lighten control over Hungry, and pay him a vast sum of money. But a lasting peace needs to happen here for the strength of the dynasty. There are critics as the newspapers have shown and sure he can post heads on spikes for the less scrupulous publishers, but he is still new as is the dynasty. He has had good PR, taxing the rich is always a popular move for the lower classes, as well as his kids Ody was seen like a brother to A3. The Empire has become one of the middle and lower classes more and more, with the new forms of media, and improved ways of sharing them. The opinion of the mob is a democracy all its own, what do they get out of having to pay the taxes to create a Fortress-Caspasia? Even with the new tax brackets which alleviate a lot of the weight off the lower rungs.
We are also discussing this like Theodor gets captured. He may very well die. Shit, he might still pull out a victory. I'd put a 10'er on him winning, the payout would be ridiculous. I'd bet a 50 though on him losing on the same ticket.