My god...
Medium galaxy, tough AI. In a galaxy with the Yor, Iconians, Krynn, Thalans and the Korath, I chose the Drath Legion.
And holy hell does the Drath kick ass. It was painfully slow in the early-game, with me almost bankrupting myself. I got a decent haul of planets in the planet gold rush and planned on taking Krynn territory. Eventually, the economy kicked in and I could afford to start thinking about my fleets. Defensive fleets galore on my planets.
After I picked off three minor races, the Korath decided to butt some heads with the Krynn.
CUE WAR PROFITEERING
Like a tsunami, I was being flooded with credits in additions to the other tsunamis of credits from my cash-cow planets.
Then both the Iconians and the Thalans joined in the fight. MORE MONEY, YAY!
All sectors were booming with my military finally outpacing the Korath. That's when I figured I might as well join in and grab a few planets for myself. Korath didn't stand a chance against my strategically designed cruisers and corvettes.
When Korath had few worlds left, the Yor declared war on the Krynn. At the same time, the Iconians and the Thalans signed peace treaties with the Korath. I forged an alliance with the Iconians and the Thalans while I still reaped the rewards of the Korath wars. Although that didn't stop the Thalans from occasionally declaring war on the Iconians, forcing me to have a stern talking with the former.
The Krynn were badly losing. Even when I sold a few of my older warships to them along with defensive technology, they still couldn't keep up. Eventually they surrendered to the Yor. (Wait, you'd rather surrender to your mortal enemy than your closest ally? What a dick!)
And that's when the Iconians had had enough with the Yor. Both started fighting across the galaxy, with my front yard as the battlefield. Oh well, at least I got to sell refreshments on the sidelines while profiteering.
In any case, I merely bode my time. Eventually, my military power was greater than all others' combined. The Yor didn't last very long and I took a sweet Diplomacy Victory.
Galactic Civilizations 2: Twilight of the Arnor