All Catholic countries should have a heavy weights discouraging the AI from attempting to annex any locations in the traditional territory of the Papal States, or at least for Latium itself. This weight shouldn’t apply to any locations that isn’t traditionally associated with the Papacy, so nations can fight back against a Borgia like hyper aggressive Papacy. This weight should disappear by the fourth or fifth era. This weight shouldn’t apply to any non-Catholic counties.
Should a Catholic country find itself in possession of traditional Papal Territory it should be weighted to return it to the Papacy until the 4th or 5th era.
Should a Catholic country refuse to return traditional Papal territory, (or at least Latium) the nation should face excommunication.
If a non-Catholic country annex Rome, a crusader to retake Rome for the Papacy should trigger immediately. (A similar Jihad response should occur if Mecca or Medina is taken by a non-Muslim country)
These are my humble suggestions since the Catholic world should treat the Papacy special, not just like some random nation, at least not for most of the game.