Please understand that this is my opionion only, okie? But i play the Advent alot, and to my mind the Vasari are very very tough to beat because of their phase technology, they can phase out and not be hurt, they can jump from planet to planet without using the phase lane, they have pretty high hull and shields and their weapons are pretty heavy. The Tec have alot of numbers, they flood into a grav well and simply dominate with a large large fleet. Not always of course or in every situation, but the Tec use large fleets closer to their HomeWorld that you come.
By the Advent having the Domination power that you describe of taking over a ship from another race, it gives a somewhat closer balance to dealing with stronger vasari fleets, or with large large tec fleets. This is just my opinion, and i believe it was the opinion of the devs as well because i believe that is why they included it in the game. But it can be disconcerting yes, if you are Tec or Vasari and have to face that. I modded a game and gave the Vasari and the Tec the Domination ability and then found my self facing my own fleet when i got to one of their closer worlds! THey had converted part of my own fleet against me!! Well, quick way to deal with that was for me to retreat and build up a larger fleet and attack again, but it took a while for me to take out my "own" converted ships, before i even started on the Tec ships that had converted mine. I took heavy losses and had to micro manage the fire against the Dominators first, to get them from continuing to "convert" my ships. I believe it took me two retreats and three assaults with a lot of ships before i did indeed get that one little planet and then i had to look at going on into 3 or 4 of their remaining planets to win the game, haha, it was intense for a long while, and i thought i was going to lose several times, but it was also fun!!
Anyway, that is my take, and hope i havent offended, but i like the domination ability, even when i dont really like it when its used on me, haha.
It just takes me alot of effort to try to overcome when they do that to me, 
-Take care,
-Teal