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Limiting defense
Personally, I do not like it when my opponent plays guys out of position against when it is not out of necessity, but because he thinks that gives him an edge. It should be an obviously bad move. I tried to trade a 2B to a team who had no one playing 2nd and was told they had no interest in acquiring a 2B. Obviously they weren't being penalized much for playing guys out of position.
I'm not saying to limit ALL players, just ones who only played minimally at a position - say 5 games or less or 20 innings or less. This is done already for hitters who are listed as platoon until they reach a requred number of at bats vs lefty or righty. It doesn't mean you can't use them some, just that you can't use them unlimited.
As for the severity of penalties for playing out of position, I think it helps the game by reducing the amount of abuse in where guys are played. I think guys playing catcher out of position is STILL not penalized heavily enough.
The penalty for someone playing SS out of position should also be quite severe or that will get LOTS of abuse with McGwire playing SS to get more punch at the position.
I do agree that moving a RF or LF to CF should not be so severely penalized though. The guys' range should be greatly reduced perhaps, but I don't see any reason for more errors.
DaveF