Well, I got a good infamy guy, so the infamy depleted a lot. I do usually go over the limit, but I don't really care, since I usually get white peace/take provinces/annex on them since I'm the strongest nation. To be honest, Flanders was a weak country I started with, but after I took over some land, Europe's view to me pretty much changed. And yes, your reputation is based on infamy.
It probably does overwrite, but I haven't seen any problems with the beta patches. Just to be safe, make a backup.