Thank you for your reports 
Yes, I am constantly developing this further and I understand the game needs some unique feature in it.
Re: Diplomacy. I think the way to do it is to have a number of racial traits and variables which modify how well they'll respond to things rather than just 'friendship'. These aren't just to do diplomacy, but how the races are 'feeling' at any moment and what their future plans are. Then you just need to give the player ways to interact with those in a meaningful way. This does require a large amount of options and the ability to uncovering their wants and needs through diplomacy or espionage.
For instance, lets say you have the Humans and the Valagars, and the Valagars want a steady supply of ore from the Humans. The Valagars gain the information through bribes/espionage that the Humans are wanting to expand to the Foo system which is currently occupied by the Arians, so the Valagars approach them with an offer to trade the ore for help causing unrest in the Foo system. This makes the humans distrust them due to how they know this information, but they go along with it. Once they've managed to cause unrest, the Valagars then blackmail the humans into giving them more ore or they'll tell the Arians about the plot. The humans decline, and that brings all three parties to the table to negotiate a settlement to stop a three way war.
It's just about giving them player loads of options and the information to make interesting decisions. If the humans war weariness was up, they might have not wanted to risk a war, but their distrust of the Valagars might have overridden that. However, a racial trait of 'pride' might make it unlikely that they would want to be seen to be involved in devious tactics like that. This could all be made deeper with things like a galactic council which could be formed to preside over disputes, and so on.
I can understand the problems with writing a lot of dialogue, but I'd be more than happy to proof read (for free) the dialogue if you need the help, and I'm sure many creative people here would be happy to write some fluff dialogue to pad things out.
I like the tactical combat plans, although I'd like to see the player gaining more abilities/controls rather than just 'attack'. I also think independent planets would be great, and add a lot of life to the galaxy too!