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But yeah, basically you just have to be substantially more powerful than them. I'm not aware of there being a restriction on vassalizing empires close to you. I don't think I've ever run into that problem, though I'm not sure how many times I've even tried it. I've definitely had voluntary vassals within that distance.
EDiT: Oh, I think I see how I misunderstood your meaning there. To carve a vassal out of your own systems, you have to create as sector then release it as a vassal. A workaaround you might want to consider is releasing them just outside of the limit and then gifting them the systems you want them to have that are closer in. Moving your capital might also work. Neither of which makes it less frustrating, but might at least help you get where you're trying to go.
To do this you can just dismantle any area within the territory you don't want so you can carve out an "island" to make your own vassal, it's essential to do when playing a trade build so you can make your own federation to get your juicy trade policy.