I'm not certain either, but right now, no one knows if it's actually working as it's intended too or not. This isn't made any easier by the fact that the "Control" value we get displayed in game is generated by a lot of functions in the code that take into account a lot of variables. On top of that, in the code, the only thing that is tracked as "Control" is the final value that gets displayed to the player. Everything else is "Order Per day" type stuff, which makes it a lot harder to parse what's going where... especially for someone like me, who's many things, but not a programmer.
It doesn't LOOK like there's a function to remove the penalty when it's added. But that might be baked in the same part of the code that clears up the Control penalty from Riots once they're resolved, and it's not obvious due to me being too dumb to see it. Or maybe into the part that handles the set-up at each start of day that calculates Income, Expenses, Subsidies, Riot chance etc...
Obviously, if the penalty gets removed when a level is subjugated, then that changes the equation significantly for a lot of reasons.
The Divider bit also takes into account certain Edicts, so it's actually possible to influence the Decay rate with Guard training Edicts, and I think the Improve Prison locks edict. On the other hand, suffering defeats seems to make it worse... but I'm REALLY not sure about that one...
Oh well... I'm still far from a fan of the measure, and odds are that when the final game comes out, I will modify the file so that it's not possible to trip the thing on any level of difficulty. Because fuck that noise.