Yes, faction mods do run the range in terms of balance. Some of the more popular ones are basically 'vanilla+1' which is kind of annoying in terms of balance, but there are a fair few balanced ones. Even a few that are vanilla-1 yet still fun to use (e.g. HMI). Getting ship packs for existing factions balances things out some, though that can still result in some of the individual vanilla ships becoming a bit behind the curve.
One other balance issue is that some mods have ships that are designed to be really good
player ships but aren't necessarily good in the hands of the AI. Definitely not cheat-level power, but there are some ships that player intention/maneuver can utilize very well. There are also some situations where a faction's ships are balanced by their in-faction weapons (or vice-versa), but the player's ability to mix-and-match factions can lead to some imbalance. Generally speaking this isn't a problem, though.
Arsenal Expansion adds a good selection of ships & weapons, along with at least one new quest. (It does add one new mini-faction as well, but not the normal sort of one.)
Blackrock Drive Yards is really darn cool, and over the years has gone from vanilla+1 to being pretty balanced. Still a few outlier ships in the player flagship category, but those tend to be high risk high reward.
Combat Chatter just adds text lines (in the combat log). Adds a bit of life to things.
Common Radar sounds like what it is - pretty handy.
Dassault-Mikoyan Engineering is one of those 'cool but vanilla+1' mods. Lots of interesting content and a neat faction, but the ships and fighters are a little overtuned in my opinion. Also adds an antagonist mini-faction with intentionally overpowered ships. Generally speaking you can't use their ships and their looted weapons are hard to use thanks to high OP and flux requirements, so it's intended more as a challenge. That faction doesn't interact with the sector like normal factions do (at least last I played), so no worries about them conquering the sector.
Diable Avionics. Same story, though mainly just due to some of the fighter (see: space mech) options.
HMI is a kind of neat 'vanilla-1' mod. Lots of crummy ramshackle stuff, a somewhat interesting new faction along with unusual star systems.
Interstellar Imperium is quite neat, but I'd consider it at least vanilla+1.
Junk Pirates adds three new factions, each of which I'd consider well-balanced and visually quite distinct. Their weapons can be a little 'vanilla-1' at times, though.
Kadur Remnant is perhaps a tiny bit bland compared to some of the other factions out there these days, but it's a) still interesting and b) made by Vayra, which means it integrates well into their 'Sector' mod (see below).
Leading Pip is a QOL mod that gives you a lead indicator for your target. Not overpowered as enemy AI is smart enough to not just walk into shots.
Legacy of Arkgneisis is a pretty well-balanced faction mod. It also behaves a little differently from normal factions.
prv Starworks is another nice faction mod. Maybe a tad undertuned, at least the last time I played, but it brings a number of neat things to the table.
Nexerelin is a diplomacy/war/etc. overhaul that's quite neat, and many of the popular mods play well with. It makes things pretty different from the normal vanilla, though.
Shadowyards Heavy Industries looks lovely and generally has some good balance, though the last time I played it definitely had some ships that are maybe a little too strong in the hands of the player. (Charybdis is just so versatile.)
Ship and Weapon Pack is actually not just a ship and weapon pack - it adds an International Bounty Board, which are basically a series of bounties against unique ships that you can then take for yourself. Some are quite challenging, and the ships you get can be 'vanilla +1', but it's balanced a bit by only ever being able to get 1 of 'em.
Starship Legends lets you 'level up' ships. Sort of. You generally end up with a mix of positive and negative quirks meant more to inject a bit of variety. If I recall there's a mechanic where enemies can get some 'leveled up' ships as well. Some of these are vanilla+1, though.
Tahlan Shipworks adds a bunch of ships to existing factions, and one 'dead faction' with a neat line of ships and equipment that are normally found as rare finds on the market or via blueprint scavenging.
Underworld adds a bunch of new pirate ships, plus a (I think optional?) new extra-jerk pirate faction to harrass you.
Vayra's Sector adds in new 'outer worlds' factions that form competition for you in terms of colonization and the like. By default it uses vanilla-style ships, but it'll integrate with some of the other faction mods as well. Also overhauls the bounty system to be better (in my opinion).
Vayra's Ship Pack is all vanilla-style ships, and they're pretty well-balanced and integrated into existing factions.
And that's just a portion. In the months since I've last played I've seen at least a few other high profile mods come out, too, which is really quite amazing considering the lifecycle of the game.
This is getting me tempted to give it another whirl. Been waiting for the next version, but...