So I went and did this:
<GameSettingDefinition Name="CompetitorCount" Type="int" Default="8">
<ItemDefinition Name="1" />

Because I wanted a true sandbox game to get to know a faction, explore in peace etc.

And the change I made, adding "<ItemDefinition Name="1" />", worked out like I hoped - the game loads you as the faction, you win on turn 1 but can continue playing - hurray.
Saves me from figuring out how to rush an an empire on a huge map while still figuring out what I'm doing.

Unfortunately you also earn a bunch of unwarranted achievments.

So it's either a bug that the game doesn't check if it has been modified or it's an exploit that would allow soembody to earn a bunch of achievments about as fast as he can load up faction and play a turn.

Also, the UI in the game creation screen is a bit freaked out if you select just 1 competitor.

Bascially, I hope that in future the ability to be the sole faction at gamestart is a basic funtionality but doesn't grant you a bunch of achievments.