Wouldn't it become too unbalanced if people started putting these generators on Huge battleships, dropping them in the heart of someone's empire, and blowing them away? I'd rather have the simple espionage system, and just assume that there are ships flying around spying, we just don't see them, like assumed civillian ships.
Perhaps, we could have semi-random events that occur if one of your agents is caught, if the other race has a higher espionage spending on you, than you do on them, which would damage relations.