I was refering to your current limits. This is usually done in analogue so reacts instantly. There are smart mosfets that will cut out in 1µs if overloaded. if the current limit does not react fast enough it can still damage stuff.
PWM DAC is easy. the output voltage will be the averaged PWM value, you use a low pass filter that has a cut off frequency 10-100 times lower than the PWM, simple matter of physics.