Versioning access considerations in SharePoint
Q. Can you limit who is able to restore during versioning?
A. Not natively. Any user who can edit a document through her Contribute permissions may restore a previous version. Deleted versions will stay in the Recycle Bin perhaps as long as 30 days, depending on the settings your administrator has set.
One thing to consider is whether you should create two libraries. One could contain the approved documents for which a very narrow group has update capability. The other “draft” library could contain documents that are moved there for the specific purpose of editing them. Check with your administrator for the options.
Also take a look at the Document Center and Records Center templates as possible solutions to safeguarding versions of documents.