Well, basically, as far as race abilities are concerned, if you want an interesting game then you should pick for the AI. So for example, you could give the Yor points in Morale, Economy, Weapons, and Hitpoints to give them a better chance of fielding a large fleet.
I did some more poking using cheat codes. It looks like there are four different sets of ability modifiers generated for each civ. First are the fixed race-based bonuses, which work as expected. Second are the political party bonuses (see below). Third are the point-based abilities. These will be read from the race config if you set them, but do not appear to be picked automatically for the AI if you leave them unset. Fourth are another set of ability bonuses that, according to the wiki page, are handed out based on the difficulty level, though exact details are unknown. These are assigned regardless of what's in the race config and are cumulative with those abilities. They're also quite significant bonuses, equal to approximately 10-12 points of optional abilities (edit: at Tough - I didn't check every level). I had been under the impression that Tough was basically an even playing field, but this is far from the case. Or maybe it's supposed to be the case if you spend your 7-10 optional points on your own civ but leave the other ones unset, in which case those bonuses are roughly equal to what you get yourself. Of course, that would assume that you remember to unset those bonuses in the configuration when you switch races.
I'm just going to leave all the point-buy abilities unset for everyone for now and maybe go back and add some more in if I think that could help remedy any observed AI weaknesses.
However, depending on the galaxy setup, there may well be another race (e.g. Drengin) that completely overshadow the other races. Each game plays out differently, and the larger the galaxy the greater the chance that a race can grab resources which significantly boost its abilities.
Sure. Every game setup and opponent mix will play out differently. I was only curious if other APT1 users had observed any general patterns.
I think I've run into the political party issue a few times but like you said, it's probably just a cosmetic glitch.
I took a closer look at this too, and it turns out not to be cosmetic. If you start in the usual way by clicking the race you want and clicking Next to continue setup, the game ignores the political party set in the race config (even if you specifically saved one earlier) and apparently picks a random party. To get the game to read the party you've set in the race configs, you need to click Next and then Back for every opponent from the race config screen. You don't need to click Save again - just going forward and back is good enough. At that point, the party "sticks" even when you click between different AI's and will also show up properly in-game.
edit2: Sorry, that last part was unclear. If you just start a game normally, the game will read the party for your own race just fine, and of course you can change it in the setup screen. It's the AI's parties that get messed up unless you do the Next/Back trick.