I can see the negative juice mechanic. It wouldn't actually affect sleeper infiltration levels; that is independent of Juice in all respects, so negative juice seductees won't hurt most sleepers very much. The one case that comes to mind where it'll be really devastating is sleeper lawyers, as they depend on their stats and skills to be effective in the courtroom, and one of the best things about seducing lawyers is that love slave lawyers are always available to defend their recruiter. If they're really crap, that's pointless, because they'll be worse than the public defender. This could be compensated by giving sleeper lawyers a large bonus.
I wouldn't lift the hard cap in favor of a soft one. I think it actually worsens the problem you experienced. A designer I often work with, Nathan McCoy, often cites the idea that if your game has a choice between an effective way to play and a fun way to play, your players will pick the effective way to play and then complain that your game isn't fun -- and they'll be right. A large number of the balance changes I have made to LCS are done with this principle in mind. When I nerf strategies or impose restrictions, the goal isn't to make the game harder to win, but to ensure the best strategies are enjoyable ones, and to create interesting and colorful failure conditions that are fun to experience in their own right.
Both the seduction cap and the recruitment cap are mechanics I put into the game to eliminate the practice of grinding more and more recruits in lieu of playing the game with your existing ones. I chose hard caps for these because soft caps don't eliminate grinding so much as make the grinding even less fun and rewarding. With a soft cap, there is a tendency to repeat the same actions over and over again like you're in a casino, hoping that the RNG blesses you, with increasingly unlikely results. It might seem like that's more realistic, or that it's interesting for there to be some chance of success rather than none, but the playstyle it invites isn't a pleasant one.
The experience you had with trying to grind out a critical sleeper you needed and getting frustrated after a month of trying is an example of the sort of behavior that the hard cap is meant to avoid; you chose a frustrating course of action based on the belief that the game had a small random chance of rewarding you, the belief that you just had to keep trying and eventually it would work. It wasn't fun to have your efforts repeatedly fail. I agree that we should avoid creating the frustrating experience you had, and that we can change the game to prevent it from occurring, but rather than having those actions occasionally pay off, what I would do is double down on the fact that they won't. If you knew from the beginning that you were hitting a hard cap, you wouldn't have kept trying, and the unpleasant experience you had would be prevented from the outset rather than just mitigated by an eventual success.
LCS currently communicates that the cap exists and what the cap is on the character profile screen (something like "X of Y lovers"), but the message you get when you run up against it doesn't do a good job of explaining that you're running into a cap and that the cap is inviolable. The standard recruit cap is very explicit -- the button to offer a recruit a job is grayed out and replaced with the text "Amelie Sho needs more Juice to recruit." There is literally no way to even try to ignore it. The seduction cap is not so explicit; it just causes your actions to fail with a fairly vague message about the person leaving after finding out about other lovers. Rather than switch to a soft cap, I would change the way the cap affects dating to make it extremely obvious that you can't succeed.