The Dominion rules almost entirely by psychological means. Now, they have the physical means to back it up, but anytime you actually fight, you have the chance of losing, or at least not winning by as much as you should have. Imagine what is going on in the minds of the various parts of the Dominion when they hear about not only how the Jem'Hadar lost a war (even with a Founder guiding them!), but how the Cardassians rebelled and didn't get wiped out.
No, it's easier to maintain control with just the reputation. Bajor already fought off one Occupation. Plus, that's just one more planet (and a rather strategic one at that!) that the Dominion doesn't have to worry about. As well, the Dominion "non-agression pact" seems to be just the first step into eventually being controlled by the Dominion.