The FEIE and foreign tax credits are just there to limit the scope of double taxation, and often they can't even do that much. Then you have to consider the cost of compliance, requiring specialist tax advice encompassing two countries; the difficulty of obtaining financial services because of FATCA; the frequent impossibility of saving for retirement because of the way the U.S. treats foreign investment funds (PFIC).
There's a reason no other country on earth tries to do this.
I hear this kind of phrasing frequently in the discourse nowadays, but it doesn't seem like a useful framing to me. Is there a safe amount of chocolate? A safe amount of sex? Are we supposed to stop enjoying every pleasure of life as soon as someone does a large study with high enough statistical power to show some negative effect on health, no matter how small?
The question is whether the enjoyment we derive from these things is worth the risk, not whether there is a "safe level", whatever that means.
Besides the extraterritoriality issue, the other problem with FATCA is that it makes Americans living overseas (99% of whom are just normal people not trying to evade taxes) radioactive to overseas financial institutions because of the potential consequences of failing to report on someone's accounts properly.
Sadly a lot of Americans hear "foreign bank account" and immediately think "tax evasion" without realizing there are a lot of ordinary Americans overseas who just want to pay the rent and save for retirement but can't because Uncle Sam follows us wherever we go for life.
Foreigners on DTVs are allowed to stay for five years. To prohibit someone living in Thailand for such a long period from opening a bank account - often necessary for paying rent and other necessities - is insane. And sanctimony about "guests adapting to their hosts" doesn't make it any less so.
There's a reason no other country on earth tries to do this.