At least you can get around the penalty from faction x by trading with their enemies in a system where faction x has no presence, which keeps things interesting. I haven't tried large scale trading, but the numbers people mention here do sound severe. But if you can get a similarly sized positive boost just with one big trading run to restore your reputation, maybe it doesn't matter much.
If the penalty's magnitude could be adjusted on a per-faction basis, this probably wouldn't seem like a ubiquitous problem. It'd also help differentiate factions from each other more. A harsh dictatorship like the Diktat would probably have strict penalties against trading with their enemies, while more low-key groups like the Independents might only penalize you a little. Anarchic groups like pirates don't seem like they would care whom you traded with at all. Historically, different attitudes towards free trade have strongly distinguished various polities (ie America vs Barbary States, Mercantilism, etc)
Maybe this feature is already in the game and I haven't experimented enough. Anyway having all the factions, which are so differentiated by lore, react identically to the different ways you can interact with them doesn't make sense.