There would be a slight problem in NOT taking a stance in a conflict round... even if you don’t intend to do anything, people may want to do something to you that requires a resistance roll 😛 It would be a bit gamely to select your ring only when that happens (and presumably take the one that has the TN discount for that particular effect if you know the rules well enough).
The “can’t defend” clause in the incapacitated condition is quite clear to me: defending against damage is clearly defined as spending fatigue equal the the amount of damage that exceeds the target’s resistance. We shouldn’t read anything more into it, I think. But it does mean that an incapacitated character can still impose +1 TN on attacks targeting them, or pick Earth to avoid a double crit (small comfort but it’s better than the alternative).
I could imagine a penalty on an unaware target saying that they cannot benefit from a stance bonus, but they should still pick a Ring to resist effects.
Like I said the only thing that bothers me with Stance bonuses outside of conflicts is that only two of those are worthwhile and the other 3 will almost never be relevant. So why give such a premium to Fire and Void? Oh and allowing Fire Stance for initiative checks would be a bit busted: way to always be first!
Finally, it’s true that this will not fix the godlike power of “Water stance Stife flush”. High water characters are a pain to deal with! They can heal Strife AND fatigue every round with opportunities; even more when they’re above half their cap and spam Calming breaths for free. But hey, they won’t laugh when you crit their face with a **