Ok, after winning a FFA against 3 cruel AI (maximum two winners) I let the game continue to see what would happen and...
I've got to agree with Ryat on this one. Infinately increasing pirate strength is not even believable. The rate of increase sounds more like an oversight to me than a planned gameplay mechanic and has nothing to do with perceived player skill. Part of the problem is actually the Pirate Pillager laser damage. Later in the game it can fire from 1/4 of the gravity well essentially obliterating any static defenses including that heavily upgraded starbase due to the range. I went six hours to see what the rate of increase would look like and it is quite funny.
That said, I actually do like an increased pirate strength in the early to mid game and it was fun to see the crazy pirate raids and there are ways to deal with it in the current version without turning it off. I don't usually play 15 hour games so probably not as big a problem for me.
Basically you have the same options IMO to deal with the current pirates in the game atleast up to the six hour mark I hit (But wow, if the rate of increase is constant I want a diplomacy pact with the pirates to get a hold of their armor and weapon increases )
1) Have your starbase protecting your planet (Enforced loyalty, auxilary governmnet, etc) to keep the pillagers off your structures (They will keep bombing the planet to no avail) and heavily fortify your starbase with repair bays and turrents (bombers are nearly worthless (except for distractions) due to the pirate flak (100+ dps) late game). This works really well even with Vasari starbase and no AOE. If your Vasari, you probably want your starbase on hold. I lost a fully upgraded starbase this way to see how it would fair... which was not good.
2) Let them destroy your planet and re-colonize.
3) Destroy the pirate base before they get overly powerful (I finally did this at 6 hour timeframe). The turrents where crazy powerful 10k health and 100+ dps. However, I was able to destroy it with six Kortuls (I didn't want to wait forever to kill the 10K hull turrents after taking out 5-6 of them with 40 carriers, etc).
Pirate stats (6 hour mark)
Name Hull, Armor, Experience (lol), DPS
Pirate Rogue 2880, 22, 15, 65
Pirate Pillager 2610, 21, 30, 86
Pirate Corsair 4620, 26, 50, 106
Pirate Cutthroat 3510, 24, 35, 28 and 83
Pirate Reaper 3975, 24, 25, 136
Pirate Turrent 10500, 34, 50, 101 (mini starbase!)