I'm out of town until Saturday, so no update for a while, but before leaving, I discovered this: the AI is diligent about never using Defenders as anything but stationed asset defense, so you can safely make their blueprint crazy strong because it lacks life support and engines. The AI will barely use them at all unless you offer a class of each weapon type, even if it would only use one type anyway. However, even giving it Medium defenders makes it astronomically better at defense.
No faction outright dominates anymore once they can all defend. The AIs instead have truly epic wars that often end up ruining both parties from the loss of life alone, which leads to an opportunist swooping in and crushing someone while they are weak. Each faction seems to follow a pattern - the Altarians are always the first to get defenders, but the Iridium Corp always gets the most -- they can afford a huge defensive army, so they often get up to six corvettes per planet! This causes the other factions to leave them alone, which ends up playing right into their hands, with them dominating the mid-game. However, they don't value military upgrades the way the Drengin do, so if the Drengin survive long enough, they often smash through their formidable defenses and start eating the Iridiums right up.
Don't sleep on the Terrans, though! One game, they were being picked apart by the Thalans, then the Krynn joined in, then the Yor. All three wanted the Terran worlds, so they ended up declaring war on each other! This distraction was exactly what the Terrans needed to mount a decisive comeback, crushing all three opponents and becoming top dog!
Know how the Yor always seem to run away with the game after a while? Doesn't happen because of all the war. The Krynn, too, never stay on top for long. Power changes hands very quickly. All I did was give the AI adequate defenders, it took care of the rest on its own. Holy shit. It was capable of organic behavior all along, it just didn't have the tools to express it.
Also I found the value that makes the AI declare war on people they could never possibly reach. Reducing that causes them to only fight with people in range. You guys are going to love V3.