Actually, he gives you two years to stop your agression, so you have one more turn to assault any castles in the provinces you just took - then you can keep them as long as you don't attack the other faction for ten years. You can remain at war with them during that time, but you can't attack them. At the end of ten years they are likely to attack you if they have any fight left in them - if you are patient you can chew up whole empires by taking a bite every decade or so - have done this to Spain and HRE many times.

Sometimes they will attack you and get excommed themselves - then you can get medeval on their ass.

Note that when the pope dies all excommunications are void. So if you really want, wait until he is old and you will only be excommed for a short time. Or have a couple good assassins ready....