Havent played the campaign, but sandbox and there I have easily overpowered my 3 neighbors even though they have formed a federation. There was also empire in the universe that was stronger than me according to overview. But that might also be due to the fact that the Empire is designed to be overpowered (immortal leaders, ecumonopolies as a home world etc.)

i played a few hours now on grand admiral, and the AI still sucks. Its so frustrating that this great game is broken because of this.

you could try the starnet mod or mabey guiles, no garuntee they work with fallen republic but worth a shot