There have been previous efforts to improve sub-task management, but they lack support for cross-project sharing setting.

Below is a patch which has been tested manually. Some extra test case are desired, but I would be unable to help more unfortunately.

Index: app/models/issue.rb
===================================================================
--- app/models/issue.rb (revision 18330)
+++ app/models/issue.rb (working copy)
@@ -1509,7 +1509,18 @@
   # Returns a scope of projects that user can assign the issue to
   def allowed_target_projects(user=User.current, context=nil)
     if new_record? && context.is_a?(Project) && !copy?
-      current_project = context.self_and_descendants
+      case Setting.cross_project_subtasks
+      when 'system'
+        current_project = nil
+      when 'tree'
+        current_project = context.root.self_and_descendants
+      when 'hierarchy'
+        current_project = context.hierarchy
+      when 'descendants'
+        current_project = context.self_and_descendants
+      else
+        current_project = nil
+      end
     elsif new_record?
       current_project = nil
     else