I'm not really sure whether minimising expansion placement would automatically lead to gaming the penalty when the new space is efficiently used for fighting benefits. Aren't there event or other buildings that give more troops or in some other way help the fighting that should make up for the penalty? I haven't made the calculations yet for specific buildings but it is possible that an efficient use of the new space could actually be beneficial rather than detrimental.
Taking the extremist fighting view here:
Space is not an issue for fighting, you have far more than you need already. Placing additional expansion can therefore not be helpful, because all the buildings that help should already be there with lots of empty space to spare.
Also, my tournament score has improved even though I keep progressing through the chapters, keep upgrading my AWs (not much though), keep placing all my expansions and spend all diamonds on premium expansions so there's still something that is not fully explained. Unless there's a certain level that when you hit it the fighting benefit goes down and up to that level it goes up but based on the calculation you listed it seems to be linear. So again, the whole when you stop progressing you automatically avoid the penalty needs more explanation by these people.
2 answers:
1. You learn and become a better player as you progress. You are not increasing your scores because you progress, but you increase your scores by becoming a better player in spite of your progress. If you had stopped progress and still learned as much about the game, your score would be even better than it is now.
2. Yes there is a point in the game where progress turns from good to bad. It is generally agreed on (I would say, although of course generally does not mean 100%) that this point is the 3 star Frog tech in chapter 15 (somewhere half-way in the chapter). Many people finish the chapter though or even do tech 1 in chapter 16 (to be able to upgrade event buildings / magic buildings 1 more level).
So the answer for you would depend where in the research tree you are
I agree and I even think that with the right strategy it doesn't have to influence the tournament score that much based on my experience.
Many other factors influence tourney scores, the point is all of those other factors you can have on your plus side, even if you keep these fixed formula numbers.
Or to put it in other words: Yes you can progress and keep increasing your scores at the same time, but what you cannot do is to reach the absolute maximum performance possible beyond a certain point of progress.
Again this is fighting extremism. If you are happy with less than maximum performance, do as you like

If progress makes you happier than fighting scores, you would be a fool to stop progress!
Also the formula only calculates the penalty and does not cover the benefits of progressing.
The formula calculates the squad size nothing else! There is nothing in progressing through chapters that will benefit the SS (as there is no good AW level or expansion).
You always have to weight the benefits of an action against this SS increase. No matter if we are talking about which AWs to level how far or how far to progress in the chapters or how many expansions one should place. But since few people want to do this there is a rule of thumb in the fighting extremist handbook for each factor:
1. Stop research at chapter 15 frogs.
2. Only upgrade the very best military AWs. Delete all the non-military and the lower powered military ones.
3. Place as few expansions as you possibly can (which means for most people reading this: stop right away and don´t place any more, you probably already have more than necessary).
Also I want to add, I am breaking all 3 of those rules

(but by a lot less than most others)