(By the way, I just noticed now that while I was writing this Craig posted a response, so sorry in advance for any conflicting answers we give. Since we don't have a playable version yet, we each have a slightly different vision of how the game will actually turn out. If we do have any conflicts (I will see when I read his post in a minute), we will discuss them here to give you a unified answer.)
Will players be able to do well if they do not conquer any other players?
You'll probably have to define what you mean by "do well". If a player doesn't conquer other planets, they can certainly survive, and so conquest is not required to play continuously. Also, a player could create a very strong economy and use this wealth to create a vast trading empire (by vast I mean not large in terms of territory, but in terms of number of trade agreements and such). This could have some benefits since through your economic control of other nations, you could influence galactic politics. I guess you could call this "doing well". Also through political channels a peaceful player could forge powerful alliances. So I guess the answer is yes, a peaceful player could do well, they might just not experience as much excitement, but its certainly all relative to what a player considers fun.
Will it be easy to expand peacefully, and if so, until what point?
I can only think of two limits on peaceful expansion: infrastructure and space. By infrastructure, I mean that an expansive payer will need to have a stable and relatively strong economy to be able to support expansion. Otherwise they may be left with too little to invest in defenses and/or research, and so other players would find them easy prey. That leads me to the second limit, space, which refers to the availability of physical space to colonize. If a player is walled in on all sides by other players, there might simply not be the space to expand into. An aggressive player might choose to fight their way out of this and conquer lands, while a peaceful player could potentially negotiate with other players to buy planets or something similar. Each option will require effort, whether thats building a military or gathering the funds to pay other nations. There will thus not likely be an "easy" way to expand, unless there just happens to be free space available.
What is the value of using money to create an army and conquer a new planet, versus using money to research production efficiency, or other economical benefits?
Depends on the circumstances a player is in, and also on how well we balance the game. Because of this, I can't really give you a good answer at this time.
is there a noticeable advantage to playing peacefully?
The advantage could be that your not investing as much in military, or putting your empire in considerable risk. However, most players will probably need to build defenses to fight off aggressors, so even peaceful players will have to invest in military, and also none-aggressive players might be seen as easier targets, so their nations could potentially be in just as much risk. I think it could balance out. The ideal situation is to have the game balanced in such a way that peaceful players and aggressive players don't have any clear advantage over the other. But then again, thats ideal, and its likely we won't have an ideally balanced game. It will be up to the players to decide what best suits the current situation they are in.
Is there a noticeable disadvantage to being one of the most powerful players?
Again, depends on balancing. But by being really powerful you will probably have many enemies, who might ally against you. To compensate, you may need to form your own alliances. Also, with such a large and expensive empire, you will need to have a very strong economy to be able to pay for defending it, and even stronger if you are continually going to war. As such, a powerful player will most likely need to command all the basic aspects of gameplay, including military prowess, economic stability, and diplomatic reputation. So the disadvantage becomes: do you have what it takes to do all this? So I would say yes, the disadvantages will be noticeable, but the reward of being known/feared/revered throughout the game should drive players to fight against them.
How do you intend to stop powerful players growing exponentially more powerful than lower-ranked players?
What I mean is, can newbies develope their economies faster than powerful players? The game becomes no fun when the powerful veteran has the advantage over the rest of the players.
Many games solve this problem by providing caps or hard limits on growth and unit counts. One of FG's main goals is to provide as few hard limits as possible, but obviously some limits will be necessary. So we're going to replace these hard limits with soft limits, meaning that as you progress in a certain thing it becomes harder and harder to continue, to the point where you could still go on but it will take huge amounts of resources to do so. Limits like these will be imposed on things like research (to some extent), ship production, colony counts, etc. So new players will have some advantage here because yes, their economies will grow easier, but obviously larger players will still no doubt have the greatest advantage with better research, more units, and so on.
The feudal system in the game will provide some unique input into the relationships between powerful players and newby players. So I guess we'll have to wait for beta to see how this all turns out. We will balance the game then as needed so that everyone, newby and veteran alike, can have a good experience.
In summary, I would like to know about how politics is balanced, and where the emphasis is on expansion (militaristic and diplomatic).
I would like to see some advantage to diplomacy, but aggression and fighting make the game more dynamic and exciting :)
I am a huge fan of good diplomacy, so you can be assured I won't let FG fail on that subject, even if it means I have to do all the coding myself :). But anyway, I think you'll be happy with how the political dynamics turn out in the game. I personally can't wait to see how beta testers react to the flexibility in FG and what interesting reults may come out of it!