If allegorical interpretation is a slippery slope, it's of the semantic variety. When you start reading things allegorically, it's certainly possible to stop when the interpretations don't make sense anymore. But it's difficult to draw a clear line between a passage that is intended to be taken strictly literally and one that is not. Further, the difference between legitimate and illicit allegoricalization can be difficult to identify.
Here's an example to chew on:
Tell me, you who desire to be under the law, do you not listen to the law? For it is written that Abraham had two sons, one by a slave woman and one by a free woman. But the son of the slave was born according to the flesh, while the son of the free woman was born through promise. Now this may be interpreted allegorically: these women are two covenants. One is from Mount Sinai, bearing children for slavery; she is Hagar. Now Hagar is Mount Sinai in Arabia; she corresponds to the present Jerusalem, for she is in slavery with her children. But the Jerusalem above is free, and she is our mother.—Galatians 4:21-26 (ESV)
Starting from Genesis, I can't see how to get to Galatians—the steps are just too tenuous. But Paul didn't start from Genesis and build the allegory from the ground up. Rather, he reinterpreted the story within the framework he'd previously established. He is connecting several related concepts (slavery, the law, Mount Sinai, Roman control of Jerusalem, and Hagar) and contrasting them with paired concepts (freedom, grace, independent Jerusalem, Jerusalem above, and Sarah) in what he openly labels an allegory. If you grasp the framework he's using, it's not difficult to divide other paired concepts (Jacob and Esau, for instance) in the same way.
The place to stop the allegory is clear if you are working deductively rather than inductively. Sodom and Gomorrah, Jannes and Jambres, and David and Jonathan are familiar pairs, but it's not obvious how they would fit into Paul's framework. Further, there can be several, overlapping meanings to a particular passage, so if the allegory doesn't fit well, you don't need to force it; a different analogy might come along and fit better. Notice that Jerusalem appears on both sides of Paul's analogy!
Allegorical fit is a matter of degree; it isn't a Boolean value. Therefore, it is subject to the semantic slippery slope fallacy. The way to avoid the problem is to pick analogies that best fit your a priori hermeneutical framework.