Would your AI have issues on a extreme map where the number of stars planets were about 40% of what they are now?
Dunno. Try it. I only play on insane with abundant settings at normal difficulty, so that's the optimum settings for the AI. You'd need to see for yourself how it does with other settings, though I suspect you'll be pleasantly surprised.
Some other thoughts/questions. In the change log you mention where you got the AI to specialize planets which is a great thing. But also in the change log it looks like you scaled back on the benefit of doing this. Or am I reading that wrong? For example all worlds seem to need approval buildings more than ever and growth bonus is flat aside from adjacency.
You need 1 approval building per farm, roughly. Though Tourism buildings now increase approval empire-wide (by 1% per tourism building). You get much lower total output bonus from production buildings, so 500% is quite a high total. This means that building big ships in 1 turn is basically almost impossible until the late game, unless you go for cost reduction techs.
Flat growth bonus means that you get +0.1 per building, which is much more potent than the % bonuses were.
You increase the odds of war but put greater buffs to trade? Ins't that inconsistent in that I spend lots of effort on trade and it gets thrown away since my neighbors want war? It also appears you want to try and limit the size of fleets since you quadrupled maintenance costs of ships. Maybe this is why the AI has to destroy them so fast.
I increased the odds of war in relation to the previous version of the mod, when war was unlikely. The AI is not massively warlike (aside from massively warlike races). You can set up a trade-based empire and not have to worry too much, provided the AI doesn't decide you're weak. In my present game, I've had 3 wars with 1 aggressive civ and none with my other neighbours; the aggressive civ has been passive for the last 100 turns or so and we've been trading for that time. Also, trade is much more worthwhile; it grows faster and caps way higher so you can pay for the freighter faster.
In the standard game we strive to increase population per planet. A production world would be farms and industry for example. Having 10% approval was identical to having 90% as it didn't really matter. Now lower approval hurts production so we need to place a more varied build out of buildings on each planet. I know you changed the soil improvement type techs to be repeatable. How does this impact planets that are 8 or smaller in size? What strategy should be involved in building out a planet?
Approval is quite easy atm, so again you really only need 1 approval building per farm. I've been thinking of making it tougher tbh. I generally have 2-4 farms and approvals, depending on how many tiles I have available, and then coat it in output buildings. A class 8 planet will eventually get to be much, much bigger, depending on how many terraforming techs you get.
With defenses nerfed it seems that hit points are now the key factor or jamming techs. Or is it still possible to have the same tech level ships where defense can keep up with offensive power yet still have room left over for other things?
Defenses keep up with offensive power. The whole weapon v defense system has been given a ground-up re-write to ensure it's balanced (I wrote an excel spreadsheet and everything). Hit points have been nerfed, defenses are smaller as well as less powerful so you can stack more. The idea is to make you actually put a smattering of all defenses on all ships, rather than dumping defenses onto 1 ship alone.
With Thalan hives nerfed (assuming no adjancency bonus now) are they still viable? That was their one advantage in their tree.
Hives still get adjacency bonuses. They're not really nerfed, either; Hives give +50% food and +50% approval, so by late-game they are vastly more powerful than they are in vanilla. You just don't get front-loaded production from them. The original intention of the Thalans was that they were supposed to take a long time to get powerful, but be really powerful once they'd finished growing. This is exactly not how they work in vanilla, but exactly how they do in IAB.
Ultimately, you'll just have to try it tbh. I don't really know what you'd prefer, so I can only really answer from my own experience, and I enjoy it.