Staying with Nancy (or getting engaged to her) would not be a good ending for Jonathan even if Steve did not exist as a character. If after Steve and Nancy's fight at the party in season 2, Steve had just immediately moved away and never been seen again, and Nancy and Jonathan's story had otherwise played out the same, then that engagement would still not be the ending Jonathan needs.
Because Jonathan's story is not a romance and his arc is not the arc of a romantic hero. When we first meet Jonathan what we're immediately told about him is that he's got this broken role of provider in his family. He's acting like a father to Will and he's making breakfast for the family and he's working extra to make ends meet and as much as Jonathan rises to that (he's a good son and a good big brother and he loves his family!) it's trapping him. And it's a source of his cynicism and sort of antagonistic relationship with most of the world. Life sucks and it's just me (and the people I have to protect) against the world.
Jonathan's story is about being strapped with responsibilities he never should have had to carry and sort of the resentment and distrust of the world that that bred. That's what the conflict is between him and Nancy in season 3 where their priorities and their worldviews clash; and that's why he's pulled back from her and is sort of paralyzed in season 4, because this responsibility to his family is paramount but is not a real plan for the future and it's kind of crushing him. And the move to propose to Nancy in season 5 is following the same line of thinking--it's this sense of duty and a perception that life is just sort of grinding along and enduring, and so if the relationship with Nancy isn't working right then it's because he's just not doing his duty hard enough.
So Jonathan's story needs to end in freeing him from the duties he's not supposed to have--making him a brother to Will instead of a parent; a son to Joyce instead of a partner; and letting him and Nancy release from a relationship that isn't working for either of them. And if you free him from it, Jonathan gets to go and find what he really wants and needs for himself.
But on the other hand, Steve's arc absolutely IS the arc of a romantic hero. Steve's arc is about embracing his natural compassion and nurturing side and shouldering responsibility.
Steve in season 1 and a good portion of season 2 obviously cares so deeply but has been taught that the key to everything is to pretend you don't care (the advice he gives to Dustin which is immediately and soundly refuted by Max falling for Lucas). And if you don't care enough then everything comes easy and you can coast through life. That's why his solution for Nancy's problems when they're dating is always "let's forget about it and pretend we're stupid teenagers." And even though he's already started to grow past it by that point, the consequences of living that way have started to catch up to him and at the start of season 3 he's lost everything because of it--his future, Nancy, and all his status. in season 2 (and 1) he experimented with letting himself be seen to care, with taking on the babysitter role (which is about responsibility) but it's in season 3 that he fully embraces it. And in that season it's a humbling role--he's following the lead of kids (and Robin) who he knows are smarter than him, and he's getting beat up, and he's doing it all in a stupid sailor outfit, and it all goes largely unrecognized. And in season 4 as a result of that, Steve is thriving in a way. He gets to be a caretaker and a protector and a leader and carry a lot of the responsibility on his shoulders and he shines in that role.
And Steve, for his part, has come to the realization of what it is that he wants out of life and very neatly and clearly laid it out for us--he wants to be a father and a husband and the picture he gives of that centers on both the responsibility aspect and the open expression of love. And he's open and expressing that care for Nancy in a way that he wasn't yet able to when he and Nancy were actually together. (Think of the contrast between season 1 Steve expressing a tiny bit of concern for the girl he's dating and instantly having Tommy and Carol mock him and season 4 Steve very simply spelling out for Nancy all his self-reflection and his feelings for her and desires for his future).
So for Steve his story needs to end with him expressing love and accepting responsibility and frankly he's already done so much of that in his current role that to be a progression or an end it really does need to take on that fuller form that he laid out for the audience in his dream of the future.