What is wrong with the current status?
I don't see a way 'to exploit the current method, especially if the debt is tracked (i.e. the treasury growing into the negative, and requiring to become positive first before production restarts). A player with sub-zero treasury is likely to have enough problems already, so why add some more? I you cannot conquer a foe that does not produce any units, then you probably don't deserve it.
Of course, that means that a lost player in an FFA may still obstruct a keypoint or something for a while, but marching through without spending troops might upset the game's balance.