I've also found that having the #1 military is the key to survival. It's the only way to guarantee that you're not going to be invaded, which, imo, is very very important

I have had very good luck building *NO* military. I even put off researching the military tech tree as long as I can help it, opting for the diplomacy techs instead. When the AI thinks you're weak, he'll sell you military techs. I always have the production capacity to crank ships if I ever need it. And if I'm ever attacked, I can always just go to another AI and trade for the techs I need, and on favorable terms beause I researched diplomacy. Sometimes when I'm on REALLY favorable terms, with Galactic Bazaar and all, I can even trade for their ships. Which are usually crap, but not when you've got a military starbase up.

I think the reason I don't get attacked is because I colonize the heck out of the galaxy at start, which grows my production capacity. If I had to guess, the AI looks at your production capacity as well as military before deciding to attack. But what I know for sure is, I have zero military and I'm not getting attacked. I've even played as Altarians, and the Drengin are sending me lots of freighters.

From what I've noticed, whether the AI attacks you has mostly to do with (somewhat in order):

1. Military Strength
2. Trade
3. Diplomacy Skill
4. Alignment (ie: if its the same as yours=less likely to attack, if not=more likely to attack)
5. Other factors (ie: "I know what you are doing" "Alarming Influence" etc.)

You can find these stats in the Report window of the Foreign Relations screen to see what is making other races like (plus sign) or dislike you (minus sign).

With high diplomacy stats, you can easily avoid wars. If other races get wary or hostile, you can pay em off to keep em off your back for a few turns till you can cancel out the negative factors. And since you have good diplomacy you can do it fairly cheaply. Don't forget, good trading can cancel out a weak military stat. I've played with almost no military ships to speak of and have avoided war until I decide to start something (All intelligent AI and higher).

I'm playing the no-military strategy against Intelligent AI's right now, giving myself sucky starts. I would assume no-military would work equally as well on Painful with a better start, since the AI is supposed to be the same.

Having top military is key even if you want to try to win thru more peaceful ways.

When i started playing gc2 i used to go the peaceful way against normal AIs on a huge map, getting as much planets as possible in the beginning, then going after economy and influence/diplomacy techs, my population, economy, production and research was way ahead of the other races, but i always got listed at very low ranks in overall comparison to the other races because i had absolutly no military, i could have conquered the whole galaxy without building a military ship because all of the other races planets rebelled under my big influence and by the time had about 60% of the galaxy i had the researched ultimate weapons and defenses, nothing could stop me now, only a few civilizations were remaining and my military was now stronger than theirs put together, that was the point were i thought: "well, nice, i won but that is quite boring".

So i decided to play a new game on a large map with intelligent AIs, at the start i got some good planets but my territory was one of the smallest, i tried to keep my research balanced and i started building military ships as early as possible, somehow i got to research xeno ethics quite fast and aligned with neutral(because the instant PQ upgrade is very nice), somehow the other races were always ahead in technologys and i could only keep up by trading techs with minor races. Then the shock, being almost surrounded by drengi and yor both of them declared war on me the same turn, a few turns later the korx declared war on me as well but didn't atack me because they were probably to far away, so what do you do when being at war with 3 races at the same time and noone is going to help you because your diplomatic skills are not sufficient, well i tried to pump out as many ships as possible and i got forced to go after the weapon and defense techs. Well not enough the torians which were also right next to me surrendered to the terrans which were now the most powerful race, but they were not going to help me against those evil guys, instead they spread their influence wide into my territory by building 5 influence starbases there, while also having 2 low quality planets in my territory(from the torians), my best planets were now lying in the blue territory, damn, i had to do something, so built some transports and invaded both planets in one turn where i also destroyed all the influence starbases, now i am at war with 4 civilizations and none of them will make peace until i got terminated the only way that i could hold off all the attacks was by building military bases, now i'm stuck, i can't get ahead by research nor by influence or by production, since i got only 3 planets capable of building ships fast enough, the other planets are needed for research, because if i give up the research the other civs get an edge on me there and i'm lost, the yor which are right next to me have only a few planets which could be conquered quite fast but i cannot defend myself and at the same time start an invasion on the yor and defend the conquered worlds against the other enemies, i managed to make peace with the drengi to get some time to breathe but they declared war on me again only a few turns later. This game is freakin me out, i'm able to hold off all attacks but i'm not getting forward. I did not finish this game yet but i'm eager to do so. By the time i had produced a fleet that would be able to invade the yor homeworld my ships would already be antiquated and overpowered by the yor. geez...